RBI's FI Index shows rise
12th Aug, 2022
The RBI's composite financial inclusion index (FI-Index) is showing growth.
About Financial Inclusion Index (FI-Index):
- The FI-Index has been conceptualized as a comprehensive index incorporating details of banking, investments, insurance, postal as well as the pension sector.
The financial Inclusion Index is based on a range between 0 and 100.
- 0 - Financial Exclusion
- 100 - Financial Inclusion
- It comprises three broad parameters - access, usage, and quality.
- The Index is responsive to ease of access, availability, usage of services, and quality of services, comprising all 97 indicators.
- A unique feature of the financial inclusion index is the Quality parameter which captures the quality aspect of financial inclusion as reflected by:
- Financial literacy
- Consumer protection
- Inequalities and deficien cies in services
- NSFI: The National Strategy for Financial Inclusion 2019-2024 sets forth the vision and key objectives of the financial inclusion policies in India to help expand and sustain the financial inclusion process at the national level.
- Aim: The strategy aims to provide access to formal financial services in an affordable manner, broadening & deepening financial inclusion and promoting financial literacy & consumer protection.
Government Vision: National Strategy for Financial Inclusion (NSFI)
Defining Financial Inclusion in the Indian Context:
- Financial inclusion may be defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low-income groups at an affordable cost.
- Financial Inclusion refers to universal access to a wide range of financial services at a reasonable cost. These include not only banking products but also other financial services such as insurance and equity products.
Issues with financial inclusion in India:
- Challenges faced in accessing financial services while opening an account, seeking credit, or opening other financial inclusion products like Micro Insurance, Pension, Investments, and Remittances.
- Issues faced while using digital financial services.
- Attitude of the financial service provider.
- Complete knowledge of the product features including terms and conditions.
- Knowledge of Customer Rights.
- Grievance Redressal Mechanisms.
- Satisfaction in using the products.
The quality of financial services delivered to various target groups would be very useful to see the impact of financial inclusion policies on overall financial wellbeing.