Reserve Bank launches index to capture financial inclusion

Source: Livemint and Business Standard

What is the News?

The Reserve Bank of India has released India’s First composite Financial Inclusion Index (FI-Index).

About Financial Inclusion Index(FI-Index):

1. Released by: Reserve Bank of India(RBI)
2. Aim: To capture the extent of financial inclusion across the country.
3. Parameters: The index comprises three broad parameters — access (35% weightage), usage (45%) and quality (20%). Each of these parameters will consist of various dimensions, which are computed based on 97 indicators.
4. Unique Feature: A unique feature of the index is the parameter related to the quality of financial inclusion. It captures information related to financial literacy, consumer protection and inequalities and deficiencies in services, 
5. Scores: The index captures information on various aspects of financial inclusion in a single value ranging between 0 and 100 where 0 represents complete financial exclusion and 100 indicates full financial inclusion.
6. When it will be published?  The index will be published in July every year.
7. Base Year:  The index has been constructed without any “base year”. It reflects the cumulative efforts of all stakeholders.

Key Findings of the Index:

1. The FI-Index for the financial year ended March 2021 crossed the halfway mark to 53.9, as compared to 43.4 for the year ended March 2017.
2. This indicates that 46.1% of the parameters considered are still financially excluded, despite the launch of several initiatives by the Government.