Reserve Bank of India (RBI) has announced the Financial Inclusion Index (FI-Index) for March 2024.The Financial Inclusion Index is a measure to measure the extent of financial inclusion across the country. In India, the Financial Inclusion Index has increased from 60.1 points in March 2023 to 64.2 in March 2024.
Historical Progress of Financial Inclusion Index (FI-Index)
- The Financial Inclusion Index (FI-Index), launched by the Reserve Bank of India (RBI) on August 17, 2021, helps measure the progress in ensuring access to financial services, timely credit and affordability for vulnerable groups in the country. Objective and Construction of Financial Inclusion Index (FI-Index)
- The Financial Inclusion Index has a value ranging from 0 to 100, with 0 indicating complete financial exclusion while 100 indicating full financial inclusion.
- The index is based on the contribution of sub-indices to indicate the depth of financial inclusion. The index indicates significant progress in India’s financial inclusion which can help promote financial inclusion in the country.
- The index is based on 97 indicators covering banking, investment, insurance, postal services and pensions.
- It aims to help measure the depth and availability of financial inclusion.
- The index is constructed without any base year, reflecting the cumulative efforts of all stakeholders towards financial inclusion over the past several years. Sub-indices and their weights
- Based on access to financial services: In this, the ease of access to financial services is measured, which has a weightage of 35%.
- Based on use: Under this, the depth of the extent of use of financial services is measured, which has a weightage of 45%.
- Based on the quality of financial services: In this, the quality of financial services is measured, which has a weightage of 20%.
Publication of Financial Inclusion Index
- FI-Index is published every year in the month of July.
RBI’s view regarding Financial Inclusion Index
- FI-Index supports inclusive growth by facilitating access to credit and safety nets important for economic stability across the country to vulnerable groups or sections.
- Augmented by digital initiatives as Aadhaar and mobile penetration expand in India, the report underlines the role of payment systems in promoting financial inclusion.
Indian National Strategy for Financial Inclusion
- The main objective of the National Strategy for Financial Inclusion of India (NSFI) is to make financial services accessible to all. Many initiatives have been taken for this. Which are as follows –
- Pradhan Mantri Jan-Dhan Yojana (PMJDY): This scheme is an important step towards financial inclusion. It aims to provide the cheapest and easiest access to financial services to the common people.
- Expansion of banking infrastructure: Banking infrastructure has been expanded under the Pradhan Mantri Jan-Dhan Yojana. Efforts are being made to integrate insurance and pension schemes in it.
- Educational focus: Customized modules and expanded literacy centers aim to have nationwide coverage by March 2024. This will improve financial literacy and increase awareness about financial services to the common people.
- Increase in the efficiency of financial intermediation: In the absence of financial inclusion, people deprived of the facilities of banks are forced to join the informal banking sector. Financial inclusion not only results in an increase in the amount of savings available, but also increases the efficiency of financial intermediation.
- All such schemes are playing an important role in strengthening the Indian economy.