India has got a composite 'Financial Inclusion Index' (FI-Index) to capture the extent of financial inclusion across the country.
Accordingly, the Reserve Bank of India has constructed a composite FI-Index which was announced in the 'Statement on Developmental and Regulatory Policies' in the first 'Bi-monthly Monetary Policy Statement' for FY22.
On Tuesday, RBI said the FI-Index has been constructed without any 'base year' and as such it reflects cumulative efforts of all stakeholders over the years towards financial inclusion.
"The annual FI-Index for the period ending March 2021 is 53.9 as against 43.4 for the period ending March 2017," RBI said in a statement.
"The FI-Index will be published annually in July every year."
As per the statement, the index has been conceptualised as a comprehensive index incorporating details of banking, investments, insurance, postal as well as the pension sector in consultation with Government and respective sectoral regulators.
"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."
"The FI-Index comprises of three broad parameters viz., 'Access (35 per cent), Usage (45 per cent) and Quality (20 per cent)' with each of these consisting of various dimensions, which are computed based on a number of indicators."
In addition, RBI said the index is responsive to ease of access, availability and usage of services, and quality of services, comprising in all 97 indicators.
"A unique feature of the Index is the Quality parameter which captures the quality aspect of financial inclusion as reflected by financial literacy, consumer protection, and inequalities and deficiencies in services."
Vaibhav Porwal, Co-Founder, dezerv (a Wealth-Tech platform) said, “Financial inclusion, is the ease of access, availability and usage of the financial system by all segments of the economy. It is an important indicator to promote inclusive growth. As Charles Kettering once said, "Problem well defined is half solved" RBI through the launch of Financial index has nicely defined the problem of coverage of financial services in the country. We believe that it is a powerful tool and will allow the regulators to develop a targeted approach to empower the bottom of the pyramid.”