FINANCIAL INCLUSION INDEX 2025: RBI REPORT

The Reserve Bank of India has published the Financial Inclusion Index (FII) 2025, measuring progress in integrating everyone into the formal financial system. The index measures inclusion based on three pillars: Access (35%), Usage (45%), and Quality (20%). The index shows improvement in financial inclusion, largely due to increased usage and quality of financial services.

Description

Copyright infringement not intended

Picture Courtesy:  NEWSONAIR

Context:

The Reserve Bank of India has published the Financial Inclusion Index (FII) 2025.

FINANCIAL INCLUSION INDEX

What is Financial Inclusion?

It means ensuring that every individual and business, regardless of income or location, has access to useful and affordable financial products and services. 

Why is this important? => Because it helps people manage their money, save for the future, invest, and protect themselves from unexpected shocks. 

  • Without it, the poor and vulnerable remain trapped in cycles of poverty. 
  • It's a critical component of inclusive growth.

What is the Financial Inclusion Index (FI Index)? 

The Reserve Bank of India (RBI) developed the FI Index to objectively measure how well India is doing in bringing everyone into the formal financial system. 

  • This composite index was first published in August 2021 for the financial year ending March 2021, without a base year. 
  • Every year it is published in July.

How Does the FI Index Measure Inclusion? => The Three Pillars: Access (35%), Usage (45%), and Quality (20%).

The index outlines information on various aspects of financial inclusion in a value ranging from 0 to 100, with 0 representing complete financial exclusion and 100 indicating full financial inclusion.

Financial Inclusion Index 2025 (FY25) => Financial inclusion across the country improved to 67 in March 2025, up from 64.2 in March 2024.

  • The improvement is largely credited to increased usage and better quality of financial services.
  • The sustained growth across all three sub-indices – Access, Usage, and Quality – reflects the deepening of financial inclusion.

Must Read Articles: 

Financial Inclusion Index (FI-Index) 

Source: NEWSONAIR

PRACTICE QUESTION

Q. Consider the following statements in the context of the Financial Inclusion Index (FI Index), :

1. The index's three broad parameters are Access, Usage, and Quality.

2. The first FI Index was published in 2021 by the Reserve Bank of India.

Which of the above statements is/are correct?

A) 1 only

B) 2 only

C) Both 1 and 2

D) Neither 1 nor 2 

Answer: C

Explanation:

Statement 1 is correct: The Financial Inclusion Index (FI-Index) developed by the Reserve Bank of India (RBI) is a composite index based on three broad parameters: Access, which accounts for 35% of the score; Usage, contributing 45%; and Quality, weighted at 20%.

Statement 2 is correct: The first FI index was published by RBI, in August 2021.

Frequently Asked Questions (FAQs)

The FI Index is a comprehensive measure developed by the RBI to track the progress of financial inclusion in India, covering various aspects of financial services.

The RBI first published the FI Index in August 2021, covering the financial year ending March 2021.

The three main parameters are Access (availability of services), Usage (how often services are used), and Quality (overall quality including financial literacy and consumer protection).

Free access to e-paper and WhatsApp updates

Let's Get In Touch!