The Reserve Bank of India has released the Composite Financial Inclusion Index (FI-Index) for the year ended 31st March 2022.
- India’s Financial Inclusion Index has improved to 56.4 from 53.9 in the previous year 2021.
GS III: Indian Economy
Dimensions of the Article:
- What does Financial Inclusion mean?
- About Financial Inclusion Index (FI Index)
What does Financial Inclusion mean?
- Financial inclusion means the availability and equality of opportunities to access financial services. It refers to a process through which individuals and businesses can access appropriate, affordable and timely financial products and services.
- The financial products and services include equity, banking, loan and insurance products.
- The efforts to broaden financial inclusion target those who are unbanked or underbanked and directs sustainable financial services to them.
- Simply put, financial inclusion extends beyond opening a bank account, as it is possible for individuals with bank accounts to be excluded from financial services.
- A more inclusive financial system is linked to stronger and more sustainable growth and development and that is why it has become a key priority for countries across the world.
About Financial Inclusion Index (FI Index)
- Financial Inclusion Index has been conceptualised as a comprehensive index comprising the details of banking, insurance, investments, postal and pension sector in consultation with government and sectoral regulators.
- FI-Index has been created without any base year.
- It reflects cumulative efforts of all stakeholders towards financial inclusion.
- It captures information on different aspects of financial inclusion in a single value in the range of 0 and 100.
- 0 indicates complete financial exclusion while 100 indicates complete financial inclusion.
- The FI-Index comprises three broad parameters (weights indicated in brackets) viz., Access (35%), Usage (45%), and Quality (20%) with each of these consisting of various dimensions, which are computed based on a number of indicators.
- It comprises of three broad parameters such as Access, Usage, and Quality. Each of these parameters comprises of various dimensions, that are computed on the basis of different indicators.
- It is responsive to ease of access, availability & usage of services along with quality of services, comprising of all 97 indicators.
- Unique feature is its quality parameter that captures the quality aspect of financial inclusion on the line of financial literacy, consumer protection etc.
-Source: The Hindu