The Reserve Bank of India (RBI) announced on Wednesday that the Financial Inclusion Index (FI-Index), which measures the extent of financial inclusion across the country, increased to 64.2 in March 2024 from 60.1 in March 2023. This improvement reflects growth across all sub-indices of the index, indicating a deeper penetration of financial services across India.
About the FI-Index
The FI-Index is designed to capture a wide array of information related to financial inclusion in a single metric, ranging from 0 (indicating complete financial exclusion) to 100 (indicating full financial inclusion). The index is constructed using three broad parameters:
- Access – Constitutes 35% of the index and measures the availability and ease of access to financial services.
- Usage – Accounts for 45% of the index, focusing on the extent to which financial services are utilized by the population.
- Quality – Holds a 20% weight and evaluates the quality of financial services, including customer satisfaction and grievance redressal mechanisms.
These parameters are further broken down into various dimensions, and a total of 97 indicators are used to compute the index.
Key Highlights
- Improvement Across All Parameters: The FI-Index saw an improvement in all its components, with the most significant contribution coming from the “Usage” dimension, reflecting a deeper and more widespread use of financial services in the country.
- Cumulative Efforts: The FI-Index does not have a base year, allowing it to reflect the cumulative efforts made over the years by various stakeholders, including the government and sectoral regulators, towards improving financial inclusion.
Historical Progress
The index has shown steady improvement over the years. For instance, the FI-Index for March 2021 stood at 53.9, which was an increase from 43.4 in March 2017. The continuous rise in the index over the years highlights the growing financial inclusion in India.
The FI-Index is published annually every July, capturing the ongoing efforts and progress in making financial services accessible and inclusive across the nation.
Relation of Financial Inclusion to RBI Grade B and Other Government Exams
The rising Financial Inclusion Index (FI-Index) is significant for aspirants of government job exams like the RBI Grade B. Understanding the importance of financial inclusion is crucial, as it often forms a part of the RBI Grade B syllabus and can be reflected in the exam pattern. Knowledge of initiatives like the FI-Index can help candidates prepare effectively for sections on financial systems, which directly impacts their success in government exams. Moreover, those seeking a career with RBI may find the information relevant when considering RBI Grade B salary, which reflects the institution’s efforts to enhance financial services accessibility.
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