Context: According to the Reserve Bank of India (RBI), the value of the financial inclusion index (FI Index) has recently increased to 60.1 from 56.4 in 2022.

About Financial Inclusion Index

• The index was launched in 2021 with the purpose of capturing the extent of financial inclusion across the country.

• 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.

• Three broad parameters: Access (35%), usage (45%), and quality (20%).

• Unique feature of the index is the quality parameter which captures the quality aspect of financial inclusion as reflected by financial literacy, consumer protection and inequalities and deficiencies in services.

• 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 absolute financial inclusion.

• It is responsive to ease of access, availability and usage of services, and quality of services.

• The Pradhan Mantri Jan Dhan Yojana (PMJDY) was a major milestone for financial inclusion and the “evolution, promotion and adoption of digital channels.

• The Jan Dhan, Aadhaar and Mobile (JAM) eco-system has brought a major shift in the field of financial inclusion by several initiatives to universalise digital payments in a convenient, safe, secure, transparent and affordable manner.

About Financial Inclusion

• Financial inclusion refers to the efforts to provide access of financial tools and products to various segments of society.

• The greater financial inclusion (FI) is crucial for wider, inclusive, and sustainable growth.

• In India, several banks, non-banking financial companies (NBFCs), micro-finance institutions (MFIs) and fintech companies are active in this field.

• According to RBI, the National Strategy for Financial Inclusion 2019-2024 (NSFI) and National Strategy for Financial Education 2020-2025 (NSFE) provide a roadmap for a coordinated approach towards financial inclusion, financial literacy, and consumer protection.

Other key fact

• The RBI has launched a financial inclusion dashboard named 'Antardrishti' to assess and monitor the progress of financial inclusion by capturing relevant parameters.