Financial Inclusion index

Financial Inclusion index

Part of: GS Prelims and GS- III –  Economy

In news The Reserve Bank of India (RBI) announced the formation of a composite Financial Inclusion Index (FI-Index) to capture the extent of financial inclusion across the country. 

• The FI-Index for the period ended March 2021 stood at 53.9 compared with 43.4 for the period ended March 2017.

About Financial Inclusion Index

• Annual Financial Inclusion Index (FII) will measure access and usage of a basket of formal financial products and services that includes savings, remittances, credit, insurance and pension products. 
• It would rate states on their performance on last-mile banking services availability.
• The index will have three measurement dimensions 
  • access to financial services
  • usage of financial services
  • the quality of the products and the service delivery. 
• These are also the G20 Financial Inclusion Indicators.
• It will be published in July every year by RBI.

• Importance of FII-

• • Provide information on the level of financial inclusion.
  • Measure financial services for use of internal policy making.
  • It can be used directly as a composite measure in development indicators.
  • It enables fulfilment of G20 Financial Inclusion Indicators requirements. 
  • It will also facilitate researchers to study the impact of financial inclusion and other macro-economic variables.

News Source: TH