FI INDEX

Recently, the Reserve Bank of India (RBI) has unveiled the first composite Financial Inclusion Index (FI-Index).
The annual FI-Index for the financial year ended March 2021 crossed the halfway mark to 53.9, as compared to 43.4 for the year ended March 2017.

Important points:

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.
It will be published annually in July every year.
It has been constructed without any ‘base year’ and as such it reflects cumulative efforts of all stakeholders over the years towards financial inclusion.
To capture the extent of financial inclusion across the country.
It 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.
It comprises three broad parameters (weights indicated in brackets) viz., Access (35%), Usage (45%), and Quality (20%) 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 for all 97 indicators.

Importance

Measures Level of Inclusion: It provides information on the level of financial inclusion and measures financial services for use in internal policy making.
Development Indicators: It can be used directly as a composite measure in development indicators.
Fulfill the G20 Indicators: It enables fulfilment of G20 Financial Inclusion Indicators requirements.
The G20 indicators assess the state of financial inclusion and digital financial services, nationally and globally.
Facilitate Researchers: It also facilitates researchers to study the impact of financial inclusion and other macroeconomic variables.

SOURCE: THE HINDU,THE ECONOMIC TIMES,MINT

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