RBI’s Financial Inclusion Index Shows Robust Growth in FY25

The Reserve Bank of India (RBI) has released the Financial Inclusion Index (FI-Index) for the Financial Year 2025, reporting a notable improvement in overall financial inclusion in the country. The index rose to 67.0, compared to 64.2 in FY24, showing encouraging progress across all three dimensions: Access, Usage, and Quality. This improvement signifies the impact of sustained policy efforts, digital adoption, and financial literacy drives in deepening inclusive finance across India.

Background of the FI-Index

The FI-Index was first introduced by the RBI in August 2021, designed as a comprehensive tool to measure the extent of financial inclusion across the country. It was developed in consultation with various stakeholders, including the Government of India, and covers broad parameters across banking, investments, pensions, insurance, and postal services.

The base year for the index is FY2017, with values ranging between 0 to 100, where 0 indicates complete exclusion and 100 denotes full inclusion.

Key Components: Access, Usage & Quality

The index is composed of three broad parameters,

• Access: Measures the availability of financial services like bank branches, ATMs, business correspondents, etc., in a region.
• Usage: Assesses how frequently people are using financial services — such as digital payments, remittances, credit, or insurance.
• Quality: Reflects aspects like financial literacy, consumer protection, grievance redressal mechanisms, and reduction in service inequalities.
• All these sub-indices showed growth in FY25, indicating a balanced and holistic expansion in financial inclusion.

Significance of the FY25 Update

The rise to 67.0 in FY25 shows sustained progress, driven by,

• Greater digital penetration through UPI, mobile banking, and Aadhaar-linked services.
• Government initiatives like Jan Dhan Yojana, PMJJBY, PMSBY, and APY.
• Continuous financial literacy campaigns, especially in rural and semi-urban regions.
• Inclusion of insurance, postal and pension data in the index, which paints a more realistic national picture.
• This holistic improvement supports inclusive growth, reduces poverty gaps, and promotes economic empowerment, especially among marginalized populations.

Objectives of the Index

The primary objectives of the FI-Index are,

• To measure and monitor the progress of financial inclusion.
• To help policy formulation by identifying gaps in access, usage, or quality.
• To serve as a benchmark for comparing India’s financial inclusion efforts over time.
• To create an incentive for financial institutions and policymakers to focus on underdeveloped regions and demographics.

Features of the RBI’s Financial Inclusion Index

• Includes banking, insurance, investment, pension, and postal sectors.
• The index is constructed in a manner that doesn’t require constant revision of the base year.
• Released annually by the RBI.
• Combines multiple dimensions for a 360-degree assessment.
• Not just based on account numbers but also on active usage and service quality.