Financial Inclusion Index by RBI
The Reserve Bank of India (RBI) developed a Financial Inclusion Index (FI-Index) in consultation with relevant stakeholders and the government. This index measures the level of financial inclusion across India. The initial FI-Index was published in August 2021, reflecting data for the fiscal year ending March 2021.
The most recent FI-Index, for March 2023, has been calculated, and it stands at 60.1, compared to 56.4 in March 2022. This increase is attributed to improvements in the Usage and Quality dimensions, indicating deeper financial inclusion.
The FI-Index is a comprehensive tool that considers aspects of banking, investments, insurance, postal services, and the pension sector. It condenses various facets of financial inclusion into a single value on a scale of 0 to 100, with 0 representing complete exclusion and 100 indicating full inclusion.
It comprises three main parameters:
– Access (35% weight),
– Usage (45% weight), and
– Quality (20% weight),
each with multiple dimensions and a total of 97 indicators.
This index evaluates
– the ease of access, availability, and usage of financial services,
– as well as the quality of these services, including financial literacy, consumer protection, and
– service inequalities.
Notably, the FI-Index does not have a specific ‘base year,’ making it a cumulative representation of efforts toward financial inclusion over time.
For the period ending March 2021, the FI-Index was 53.9, a significant improvement from 43.4 for the period ending March 2017. Going forward, the FI-Index will be published annually in July.
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