Context:

The Financial Inclusion Index released by the Reserve Bank of India increased to 64.2 in March 2024.

More on the News

• The Financial Inclusion Index (FI-Index), measuring the level of financial inclusion nationwide, increased from 60.1 in March 2023 to 64.2 in March 2024, as reported by the Reserve Bank of India (RBI). 
• The improvement in the FI-Index is mainly contributed by the usage dimension, reflecting the deepening of financial inclusion. 

Financial inclusion  

• • Financial inclusion aims to ensures formal banking services are available to all households and citizens, including those in unbanked or underbanked areas.
• • It is a key factor in achieving inclusive growth.

About the Financial Inclusion Index

• The FI-Index was constructed in 2021 without any ‘base year’ and as such it reflects the cumulative efforts of all stakeholders over the years towards financial inclusion. 
• The FI-Index is published annually 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. 

Composition and Parameters: 

• The FI-Index incorporates three main parameters: Access (35% weight), Usage (45% weight), and Quality (20% weight). 
• Each of these parameters includes various dimensions assessed through 97 indicators, covering aspects such as ease of access, availability, usage of services, and service quality.
• A unique feature of this 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.