Context

• Department of Financial Services, Ministry of Finance will release an Annual Financial Inclusion Index from 2019 onwards.

About

• FII will be a measure of access and usage of a basket of formal financial products and services that include savings, remittances, credit, insurance and pension products.
• The index will have three measurement dimensions-

(a) Access to financial services

(b) Usage of financial services

(c) Quality.

Significance

• Financial Inclusion Index can be used directly as a composite measure in development indicators.
• The single composite index will give a snap shot of level of financial inclusion that would guide macro policy perspective.
• The various components of the index will also help to measure financial services for use of internal policy making.
• It enables fulfilment of G20 Financial Inclusion Indicators requirements.
• It will also facilitate researchers to study the impact of financial inclusion and other macro-economic variables.
  
  

  G20 Financial Inclusion Indicators: • The Indicators were designed to assess the state of financial inclusion and digital financial services, and aim to support countries in achieving their financial inclusion goals. They measure access to, use of, and quality of financial services. The Global Partnership for Financial Inclusion (GPFI) developed the indicators, and they build on the G20 basic set of indicators, endorsed and announced in 2012. GPFI: • The Global Partnership for Financial Inclusion (GPFI) is an inclusive platform for all G20 countries, interested non-G20 countries and relevant stakeholders to carry forward work on financial inclusion, including implementation of the G20 Financial Inclusion Action Plan, endorsed at the G20 Summit in Seoul. • The GPFI is the main implementing mechanism of the endorsed action plan by G20 Leaders during the Seoul Summit and functions as an inclusive platform for G20 countries, non-G20 countries and relevant stakeholders for peer learning, knowledge sharing, policy advocacy and coordination. It contributes to strengthen coordination and collaboration between various national, regional and international stakeholders, as called for in Action Item 6 of the G20 Financial Inclusion Action Plan. G20: • The G20 was created in 1999 in response to the financial crises in the late 1990s, the growing influence of emerging market economies on the global economy, and their disproportionately modest participation in the decision-making process. G20 Leaders met for the first time in 2008 in Washington D.C. and at that time the G20 was to play a pivotal role in responding to the global economic and financial crisis. • The G20 is made up of the finance ministers and central bank governors of 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States of America, as well as the European Union, which is represented by the President of the European Council and by Head of the European Central Bank. • The Presidency of the G20 rotates annually among its members. The Presidency leads a three-member management group of the previous, current and future chairs, referred to as the Troika, the purpose of which is to ensure transparency, fairness, and continuity from one presidency to another. The G20 does not have a secretariat of its own. A temporary secretariat is set up by the country that holds the presidency for the term of chairmanship.

Learning Aid