From UPSC perspective, the following things are important :
Prelims level : Financial Inclusion Index
Mains level : Financial inclusion of masses
The Reserve Bank of India (RBI) has announced the formation of a composite Financial Inclusion Index (FI-Index) to capture the extent of financial inclusion across the country.
Financial Inclusion Index
- The FI-Index will be published in July every year.
- 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.
- It has been conceptualized as a comprehensive index incorporating details of banking, investments, insurance, postal as well as the pension sector in consultation with the government and respective sectoral regulators.
- It has been constructed without any ‘base year’ and as such it reflects cumulative efforts of all stakeholders over the years towards financial inclusion.
Parameters of the index
- The FI-Index comprises three broad parameters viz.,
- Access (35%),
- Usage (45%), and
- Quality (20%)
- These parameters are the identification of the customer, reaching the last mile, and providing relevant, affordable and safe products.
- The index is responsive to ease of access, availability and usage of services, and quality of services for all 97 indicators.
This year’s highlight
- The annual FI-Index for the period ended March 2021 stood at 53.9 compared with 43.4 for the period ended March 2017.