Financial inclusion index should disclose all parameters: Sumita Kale

RBI's Financial Inclusion Index needs greater transparency, granular data and a shift towards usage, quality and household financial well-being, says Indicus Foundation CEO Sumita Kale in an interview

The National Strategy for Financial Inclusion (NSFI) 2025–30 has shifted the focus from basic access to enhancing the usage, quality and resilience of financial services. Reserve Bank of India (RBI) Governor Sanjay Malhotra said in August that notwithstanding the considerable progress (made in financial inclusion), the Financial Inclusion Index (FI-Index) has scope for further improvement in usage and quality while also addressing gaps in access. Sumita Kale, chief executive officer and senior fellow of Indicus Foundation, in an email interview with Raghu Mohan, discusses issues around the FI-Index and its recalibration. Edited excerpts: 

What according to you are the shortcomings in the FI-Index? 

The purpose of any data or index is to guide policy and strategy by pointing out where we have progressed and which gaps remain to be filled. But the FI-Index, as it stands today, does literally nothing to serve this purpose. The levels of the sub-indices of “access”, “usage” and “quality” have not been released regularly. In fact, in the latest RBI “Report on Trend and Progress of Banking in India” (FY25), just the overall FI-Index is reported at 67 in March 2025, up from 43.4 in 2017 with no values for the sub-indices. The full list of 97 parameters that make up this FI-Index is not available. 

 

What does this lead to on the visibility front in this space? 

The complete lack of details makes this aggregate number quite meaningless, as a standalone index. While the level of zero is said to correspond to “complete financial exclusion” and 100 is said to denote “full financial inclusion”, we do not know the targets for the parameters and for the sub-indices, leaving no clarity on what exactly is meant by “full financial inclusion”.

 

What is your view as to how these issues are to be addressed with the recalibration of the FI-Index? 

Given the diversity we have across geographies and population segments, it is heartening to see the latest National Strategy for Financial Inclusion: 2025-30 call for disaggregated data at a granular level and across gender. There is a lot that needs to be done in the revamp of the FI-Index as the RBI has decided to go in for. This includes full disclosure on the chosen parameters, the sub-indices, district-level details, gender details, activity/dormancy of accounts, activity levels of business correspondents and so on. The levels of sub-indices should be released, with more transparency on where states and districts are moving amongst these indicators.

 

In your opinion, can regulated entities (REs) use the FI-Index to refine their strategies for financial inclusion? 

Definitely but just an index will not be of much use for strategies. A single aggregate index value gives no direction to any of the stakeholders on where to focus — be it industry, policymakers at the state and central levels, academia, or consumer protection groups. An index would need to be accompanied with more detailed data across various financial services at a granular geographic level, providers can fine-tune their distribution of products, services, incentives for agents etc accordingly. A dashboard and India map can help throw visibility into many parameters to guide stakeholders.

 

An index is made in a certain context. What do you think should be the timeframe for a periodic review? And related, should stakeholder inputs also be taken into account? 

In the end, the goal of financial inclusion is financial well-being of households, which at Indicus, we have defined as “a state where households, and individuals within, are confident of meeting current and ongoing financial obligations and feel secure of their financial future.” Measuring the ability of households and individuals to meet routine and predictable payments, withstand financial shocks, and adequately plan for them can best be achieved through a combination of large-scale household and smaller-sample, qualitative surveys.

Supply-side data on delivery or access infrastructure and usage do not provide adequate insights into these aspects. The forthcoming National Household Income Survey from the government can provide some useful insights here. As the next step, the RBI can look ahead with stakeholders towards creating a meaningful financial well-being index, which will allow target setting and monitoring. Also, the underlying data should be shared in the public domain at the maximum level of granularity. After all, financial inclusion is not an end in itself, it is the beginning of financial empowerment for the most vulnerable sections of the society, and ultimately that is what we would need to track.

 

Is it time for REs to reimagine their approach to financial inclusion? 

Yes, it is high time REs move away from thinking of financial inclusion as just regulatory mandates and look at the new emerging opportunities instead. Only then will the “usage” and “quality” aspects of FI-Index get meaningful progress. A focus on the financial well-being of households will also determine the sustainability and growth of REs’ business models. For this, REs should ensure responsible business practices and effective consumer protection. Household stress bleeds into the system, so rather than leaving it to the regulators to step in, self-regulatory organisations and industry should collaborate for a healthy, resilient customer-centric environment.