India's Financial Inclusion Index improves to 64.2 in 2023-24

India's Financial Inclusion Index (FI-Index) for the financial year ended March 31, 2024, has improved to 64.2 vis-a-vis 60.1 in March 2023, with growth witnessed across all sub-indices, the RBI announced on Tuesday.

The improvement in the FI-Index reflects a deepening of financial inclusion across the country, the RBI said.

The FI-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 inclusion and 100 indicates full financial inclusion.

The FI-Index comprises three broad parameters (weights indicated in brackets) viz., Access (35 per cent), Usage (45 per cent), and Quality (20 per cent) with each of these consisting of various dimensions, which are computed based on a number of indicators.

The Index is responsive to ease of access, availability and usage of services, and quality of services, comprising a total of 97 indicators.

A unique feature of the Index is the Quality parameter which captures the quality aspect of financial inclusion as reflected by financial literacy, consumer protection, and inequalities and deficiencies in services.

The annual FI-Index had earlier risen to 53.9 for the period ending March 2021 from 43.4 for the period ending March 2017 which reflects the steady rise in financial inclusion along with economic development that is taking place in the country.

There has been a renewed national focus on Financial Inclusion, promoting financial education and literacy and making credit available to productive sectors of the economy including the rural and MSME sector which has led to the improvement in the FI-Index, according to the RBI.