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Financial Inclusion Index

2021 AUG 18

Preliminary   > Economic Development   >   Indian Economy and Issues   >   Reports and indices

Why in news?

  • The Reserve Bank of India (RBI) on 17th August 2021 announced the formation of a composite Financial Inclusion Index (FI-Index) to capture the extent of financial inclusion across the country.

About the index:

  • The index has been conceptualised as a comprehensive index incorporating details of banking, investments, insurance, postal as well as the pension sector in consultation with the government and respective sectoral regulators.
  • 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 annual FI-Index for the period ended March 2021 stood at 53.9 compared with 43.4 for the period ended March 2017.
  • The FI-Index will be published in July every year
  • The Index has been constructed without any ‘base year’ and as such it reflects cumulative efforts of all stakeholders over the years towards financial inclusion

Parameters:

  • FI-Index comprises three broad parameters:
    • Access (weightage - 35%)
    • Usage (weightage - 45%)
    • Quality (weightage 20%)
  • Each of this parameter consist various dimensions, which are computed based on 97 indicators.

PRACTICE QUESTION

With reference to ‘Financial Inclusion Index’, consider the following statements:

1. It as a comprehensive index incorporating details of banking, investments, insurance, postal as well as the pension sector

2. It is published in each month

3. Base year for Financial Inclusion Index is 2012

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 and 3 only

(c) 1 and 3 only

(d) 1,2 and 3

Answer