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.
In August last year, the central bank said it has been conceptualised as a comprehensive index, incorporating details of banking, investments, insurance, postal, as well as the pension sector, in consultation with government and respective sectoral regulators
Mumbai:
The RBI’s composite financial inclusion index (FI-Index) capturing the extent of financial inclusion across the country rose to 56.4 in March 2022, showing growth across all parameters.
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 value of FI Index for March 2022 stands at 56.4 vis-a-vis 53.9 in March 2021, with growth witnessed across all the sub-indices,” the RBI said in a statement.
In August last year, the central bank said it has been conceptualised as a comprehensive index, incorporating details of banking, investments, insurance, postal, as well as the pension sector, in consultation with government and respective sectoral regulators.
The FI-Index comprises three broad parameters — 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 several indicators.
The FI-Index was constructed without any ‘base year’ and as such it reflects the cumulative efforts of all stakeholders over the years towards financial inclusion.
The index is now published annually.
Meanwhile,. D Subbarao, former governor, Reserve Bank of India has said ”The next revolution in finance will be driven by technology oriented policies, such as the JAM trinity (Jan Dhan Yojana, Aadhaar and Mobile number), digital infrastructure as a public good, interoperability across all sectors, emphasis on consumer protection, and most importantly the closing of the gender gap.”
However, as access to credit still remains a challenge, technology will help widen the reach ”The only sustainable way we can get to 5 trillion and beyond is if the bottom 600 billion Indians are part of the process. Microfinance loans that help low income households regularize their income stream are expensive to process because of the small ticket size and higher transaction cost. Technology will make it possible to cut down costs till the mile, customize credit and reach the customer at lower cost,” he added.
Highlighting the new age of digital lenders and emphasizing the significance of digital innovation in fostering inclusive growth for the financial industry, Praveena Rai, COO, National Payments Corporation of India (NPCI), said, ”We have moved from a situation where a large swath of people did not have access to credit. Today, the confidence of people is building up in the financial system. And a large part of this is driven by technology and a well-structured set of assisted services. It is also the magic of business correspondence, bank withdraws Customer Service agents, development of bank branches, all of that coming together.”
Both were speaking at the first edition of Lentra Digital Lending Transformation Global Summit 2022 in Mumbai. The transformation summit also underscored the need for inclusive growth and collaborative strategies between banks, new age tech enterprises, the Government, and regulators.