Financial inclusion is increasingly influence monetary policy and a formal system to gauge it helps, said Michael Patra, deputy governor at the Reserve Bank of India (RBI), on Friday.
The RBI launched a national financial inclusion index (FI-Index) in September, using 97 indicators to gauge financial inclusion. According to it, the country has achieved just about half of its goal in financial inclusion.
“Furthermore, a measurable indicator of financial inclusion can be incorporated into monetary policy rules and reaction functions to examine its correlation with output and inflation and their volatility. For the first time, the influence of financial inclusion on the size and timing of policy rate changes can be gauged,” Patra said in his address at a financial