Financial Inclusion Index 2022

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Context:

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.

Relevance:

GS III: Indian Economy

Dimensions of the Article:

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.

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