Financial Inclusion Index

  • August 18, 2021
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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Financial Inclusion Index

Subject – Economy

Context – RBI unveils financial inclusion index.

Concept –

  • The Reserve Bank of India(RBI) announced the formation of a
  • composite Financial Inclusion Index (FI­Index) tocapture the extent of financial inclusion across the country.
  • The FI­Index for the period ended March 2021 stood at53.9 compared with 43.4 for the period ended March 2017.
  • The annual FI­Index 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
economy Financial Inclusion Index