Reserve Bank of India's FI-Index shows better access to financial services

 The RBI had announced the introduction of such an index in its bi-monthly monetary policy statement on April 7

Going by the Reserve Bank of India’s (RBI) Financial Inclusion Index (FI-Index), which the central bank introduced on Tuesday, the extensive work done to improve access to financial services appears to be paying off.

According to the RBI’s assessment, the FI-Index for the period ended March 2021 was 53.9 as against 43.4 for the period ended March 2017. The central bank will publish the index annually in July.

The index will be a single value between 0 and 100, where 0 represents complete financial exclusion and 100 shows full financial inclusion. And, it will have three broad parameters with weights — access (35 per cent), usage (45 per cent), and quality (20 per cent). Each of these parameters has various dimensions, computed based on several indicators.

“The index is responsive to ease of access, availability, and usage of services, and quality of services, comprising all 97 indicators,” the central bank said.

A unique feature of the index is the quality parameter, which will capture the financial literacy, consumer protection, and inequalities and deficiencies in services. The index has no base year, reflecting the cumulative efforts of all stakeholders over the years towards financial inclusion.

The RBI had announced the introduction of such an index in its bi-monthly monetary policy statement on April 7.