Little more than half of financial inclusion achieved, says RBI's new index

The Reserve Bank of India (RBI) on Tuesday introduced its annual composite Financial Inclusion index (FI-Index) to capture the extent of financial inclusion in the country.  

The index will be a single value between 0 and 100, where 0 represents complete financial exclusion and 100 shows full financial inclusion.

According to RBI’s assessment, the FI-Index for the period ending March 2021 is 53.9 as against 43.4 for the period ending March 2017. RBI will publish the index annually in July.

The index incorporates details of banking, investments, insurance, postal as well as the pension sector in consultation with Government and respective sectoral regulators, the central bank said in a statement on its website.  

The index will have three broad parameters with weights -- access (35 per cent), usage (45 per cent), and quality (20 per cent). Each of the parameters has various dimensions, computed based on several indicators.

“The index is responsive to ease of access, availability and usage of services, and quality of services, comprising in all 97 indicators,” the central bank said in its statement, adding, a unique feature of the index was the quality parameter which captured the quality aspect of financial inclusion as reflected by financial literacy, consumer protection, and inequalities and deficiencies in services.

The index has no base year, reflecting cumulative efforts of all stakeholders over the years towards financial inclusion.

The RBI had announced the introduction of such an index in its bi-monthly monetary policy statement on April 7.