Reserve Bank of India’s financial inclusion index
- August 3, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Reserve Bank of India’s financial inclusion index
Subject: Economy
Section: Monetary Policy
Context: The Reserve Bank of India’s (RBI’s) composite financial inclusion index (FI-Index) that captures the extent of financial inclusion across the country, rose to 56.4 in March 2022, up from 53.9 in March 2021, reflecting growth across all sectors.
Concept:
- The annual FI Index will be published in July every year, the RBI said in a release.
- The index incorporates details of banking, investments, insurance, postal as well as the pension sector in consultation with the government and respective sectoral regulators.
- The index captures information on various aspects of financial inclusion in a single value ranging between 0 and 100, where 0 represents complete financial exclusion and 100 indicates full financial inclusion.
- The FI Index comprises three broad parameters (weights indicated in brackets)
- Access (35 percent),
- Usage (45 percent), and
- Quality (20 per cent)with each of these consisting of various dimensions, which are computed based on a number of indicators.
- It has been constructed without any ‘base year’.
- A unique feature of the index is the Quality parameter that captures the quality aspect of financial inclusion as reflected by financial literacy, consumer protection, and inequalities and deficiencies in services
- The FI-Index is responsive to ease of access, availability and usage of services, and quality of services, comprising in all 97 indicators. A unique feature of the FI-Index is the quality parameter, which captures the quality aspect of financial inclusion as reflected by financial literacy, consumer protection, and inequalities and deficiencies in services.
- The RBI had conceptualised the FI-Index as a comprehensive index incorporating details of banking, investments, insurance, postal as well as the pension sector in consultation with the government and respective sectoral regulators. The FI-Index is published annually in June every year.