RBI's Financial Inclusion Index increased by 64.2% in March 2024

The Reserve Bank of India (RBI) has positive news about financial inclusion across the country. Their FI-Index has climbed to 64.2 in March 2024, showing an increase in all evaluated categories. Let us tell you that this index is a metric to measure this progress.

The index will be a single score, on a scale of 0 to 100, indicative of the state of financial inclusion in India. On a scale where 0 is synonymous with complete exclusion and 100 equals complete inclusion, the RBI statement reflected a positive outcome with its March 2023 gain of 60.1.

It notes that this increase in the FI-Index is mostly driven by the 'Usage Dimension' and accounts for the increase in penetration of financial services to lower strata of the population.

The FI-Index is a composite index, which encapsulates three core parameters: access, usage, and quality.

Where access carries a weightage of 35 percent and assesses how easily one can receive financial services, usage carries the weightage of 45 percent and assesses how often and to what extent people avail these services. Now, with regard to quality, it carries a weightage of only 20% as a whole. Here, it also focuses on the variables for financial literacy, consumer protection, and service quality.

Of these, each parameter is again subdivided into sub-dimensions calculated by various indices.

In an announcement made this year in 2021, the RBI reiterated the collaborative development of the FI-Index with the government and sectoral regulators.

It draws on banking, investment, insurance, postal services, and even the pension sector. The index goes beyond simple accessibility to include user experience and service quality. It is in this light that there is relevant introduction by the RBI of a unique set of qualitative criteria through the FI-Index, which assesses parameters like financial literacy, consumer protection, and probable inequity and weak points in the delivery of service.