By how much the Reserve Bank of India's Financial Inclusion Index has improved from FY 2024 to FY 2025?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is Option 1: 2.8%.
Explanation:
- According to the latest data released by the Reserve Bank of India (RBI) regarding the Financial Inclusion Index (FI-Index), an improvement of 2.8% was recorded from the financial year (FY) 2024 to FY 2025.
- Index Value: In March 2024, the index stood at 64.2, which rose to 66.0 (estimated/reported) in March 2025.
- Reasons for Improvement: This increase is primarily attributed to improvements observed in the 'Usage' and 'Quality' parameters. The growth in digital payments and the expansion of banking services in rural areas have played a significant role in this regard.
- What is the FI-Index?: It is a comprehensive index designed by the RBI to encompass details across the banking, investment, insurance, postal, and pension sectors.
Three Main Dimensions (Parameters) of the FI-Index:
- Access (35%): Availability of banking touchpoints, ATMs, and post offices.
- Usage (45%): Actual utilization of savings accounts, credit, insurance, and remittances.
- Quality (20%): Financial literacy, consumer protection, and grievance redressal mechanisms within services.
Important Questions for Upcoming Examinations:
Question: What is the range of the Financial Inclusion Index (FI-Index)?
Answer: 0 to 100 (where 0 represents complete financial exclusion and 100 represents complete financial inclusion).
Question: In which month does the RBI release this index annually?
Answer: In July (for the financial year ending in March).
Question: What is the primary objective of the term 'Financial Inclusion'? Answer: To ensure financial services at affordable prices for the backward and low-income sections of society.