Which one of the following correctly represents the three key sub-indices of the Financial Inclusion Index (FI-Index) of the Reserve Bank of India (RBI)?

Correct Option

The correct option is C. Access, Usage, and Quality

[as per provisional answerkey]

Explanation

The Financial Inclusion Index (FI-Index) is a comprehensive index conceptualized and released by the Reserve Bank of India (RBI) to capture the extent of financial inclusion across the country. It is a single composite index that aggregates data from various sectors including banking, investments, insurance, postal services, and the pension sector.

The index is constructed based on three broad parameters (sub-indices), each assigned a specific weightage:

• Access (35% weightage): This parameter measures the availability of financial infrastructure. It includes indicators such as the number of bank branches, ATMs, and banking correspondents per unit of population or area.
• Usage (45% weightage): This parameter reflects the actual utilization of financial services. It tracks indicators like the number of active savings accounts, credit accounts, insurance policies, and the volume of digital transactions.
• Quality (20% weightage): This parameter assesses the qualitative aspect of financial services. It encompasses financial literacy, consumer protection, and the grievance redressal mechanism, ensuring that the services provided are meaningful and safe for the users.

The FI-Index has been designed to be responsive to availability, ease of access, usage, and quality of services, with a score ranging from 0 to 100, where 0 represents complete financial exclusion and 100 indicates full financial inclusion.

Key Takeaway:
The RBI's Financial Inclusion Index is built on three pillars: Access (infrastructure), Usage (utilization), and Quality (literacy and protection), with 'Usage' carrying the highest weightage.