Financial Inclusion Index

 

Financial Inclusion Index

Why In News?

Financial Inclusion-Index rises to 64.2 in March 2024

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 Reserve Bank of India has constructed a composite Financial Inclusion Index (FI Index) to capture the extent of financial inclusion across the country.


What is the Financial Inclusion Index?


Q     The Financial Inclusion Index is a comprehensive index that will incorporate the details of banking, insurance, investments, pension and postal sectors.

Q     The index will be calculated in consultation with the government and respective sectoral regulators.

Q     It will be released in July annually.

Q     The FI-Index captures various aspects of financial inclusion in India to assess the extent of the country’s financial inclusion.

Q     It is a single value that ranges between 0 and 100. While ‘0’ represents complete financial exclusion, ‘100’ represents complete financial inclusion.

Q     There is no base year taken to calculate the FII and the value will represent the actual cumulative result of efforts taken over the years.

Q     There are three broad parameters for calculating the FI-Index. They are:

1.    Access to financial services

2.    Usage of financial services

3.    Quality of products and service delivery

The weighage of the parameters are:

1.    Access – 35%

2.    Usage – 45%

3.    Quality – 20%

Q     There are varied dimensions for each of the above parameters which are calculated based on 97 indicators.

Q     The index is responsive to ease of access, availability and usage of services, and quality of services for all 97 indicators.

Q     The ‘quality’ parameter is unique in that it captures the consumer protection, financial literacy, deficiencies and inequalities in service.

Q     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.

Q     The annual FI-Index for the period ending March 2021 was 53.9 as against 43.4 for the period ending March 2017.

Q     The FI-Index is published annually in July every year.



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