The Reserve Bank of India’s composite financial inclusion index (FI-Index) capturing the extent of financial inclusion across the country rose to 56.4 in March 2022, showing growth across parameters. RBI now publishes the index annually in July every year.
The index stood at 53.9 in March last year. It was at 43.4 for the period ending March 2017, showing rapid improvement in reach of financial services over the past five years.
How The Index Calculated:
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 comprises three broad parameters — access with 35% weightage, usage with 45% weightage and quality with 20% weightage. It incorporates details of banking, investments, insurance, postal as well as the pension sector.
What Is Financial Inclusion:
Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.
Being able to have access to a transaction account is a first step toward broader financial inclusion since a transaction account allows people to store money, and send and receive payments. A transaction account serves as a gateway to other financial services.