FINANCIAL INCLUSION INDEX (FI-INDEX)
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The Financial Inclusion Index (FI-Index) has been designed as a broad-based measure that includes information from diverse sectors such as banking, investments, insurance, pensions, and postal services. Its development involved collaboration with the government and relevant regulatory authorities from each sector.
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One of the distinguishing aspects of the FI-Index is the inclusion of a 'quality' component. This element evaluates the effectiveness of financial inclusion by considering factors like financial literacy, consumer protection standards, and disparities or shortcomings in service delivery.
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The index provides a single, composite score that summarizes multiple dimensions of financial inclusion. This score ranges from 0 to 100, where 0 implies total exclusion from the financial system, and 100 denotes complete inclusion.
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The FI-Index is structured around three main components: Access (accounting for 35% of the index), Usage (45%), and Quality (20%). Each of these components is further broken down into several dimensions, which are assessed using a range of specific indicators.
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Notably, the FI-Index does not use a fixed base year. Instead, it serves as a cumulative measure of progress made by all stakeholders in enhancing financial inclusion over time. The index is released annually every July
- Pradhan Mantri Jan Dhan Yojana (PMJDY): Launched on August 28, 2014, by Prime Minister Narendra Modi, this flagship scheme was introduced with the goal of promoting financial inclusion by providing affordable access to essential financial services such as savings and deposit accounts, remittances, credit, insurance, and pensions.
- The scheme allows individuals to open bank accounts without any charges or requirements for maintaining a minimum balance. It also offers a free RuPay debit card that includes accident insurance coverage of ₹2 lakh, along with the option of an overdraft facility up to ₹10,000.
- PMJDY account holders are eligible for various schemes such as Direct Benefit Transfer (DBT), the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY), the Pradhan Mantri Suraksha Bima Yojana (PMSBY), the Atal Pension Yojana (APY), and support through the MUDRA scheme.
- Digital India: Initiated on July 1, 2015, by the central government, this programme envisions creating a digitally empowered society and knowledge-based economy. It brings together multiple digital initiatives under one umbrella, each aimed at enhancing digital infrastructure, improving governance, and preparing India for a tech-driven future.
- Prominent initiatives under the Digital India programme include the Bharat Interface for Money (BHIM) app, the Goods and Services Tax Network (GSTN), Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDISHA), Aarogya Setu, Digital India BHASHINI, and the Open Network for Digital Commerce (ONDC).
- Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY): This is a renewable, one-year life insurance plan that offers coverage of ₹2 lakh for death from any cause. It is available to individuals aged 18 to 50 years who have a bank account
- Aadhaar and Financial Inclusion: The JAM trinity—Jan Dhan, Aadhaar, and Mobile—forms the backbone of India’s financial inclusion strategy. This framework has significantly broadened the scope of direct benefit transfers (DBT). The government’s introduction of Aadhaar, a biometric identification system, has simplified procedures for opening bank accounts, thereby fostering greater inclusion within the financial ecosystem.
- Atal Pension Yojana (APY): Introduced in 2015, this scheme is aimed at workers in the unorganised sector, who generally lack access to formal retirement plans. APY promotes voluntary savings to help these individuals build a stable and secure income for their retirement years.
- The scheme guarantees fixed pension amounts ranging from ₹1,000 to ₹5,000 per month, depending on the subscriber’s age at enrollment and the monthly contributions made. Individuals aged between 18 and 40 are eligible to join the scheme, and the pension begins once they reach 60 years of age.
- Pradhan Mantri Suraksha Bima Yojana (PMSBY): This is an annually renewable personal accident insurance plan designed to provide financial protection against death or disability due to accidents. It is open to individuals aged 18 to 70 who hold a bank account and consent to auto-debit of the premium.
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In May 2025, the Ministry of Statistics and Programme Implementation released the Comprehensive Modular Survey: Telecom, 2025. The findings highlighted a significant rise in the use of online banking among rural Indians, with a particularly notable increase among young women.
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The percentage of women in rural regions capable of using online banking services climbed substantially to 30.0% in the first quarter of 2025, a significant jump from 17.1% recorded in the 2022–23 period.
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Among rural females aged 15 to 24, 51.4% reported being able to carry out online banking transactions—more than double the 19.6% reported in the previous Comprehensive Annual Modular Survey for 2022–23 (July–June), which was released in October 2024.
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Urban areas, where digital banking was already more prevalent, saw a relatively moderate increase. In these regions, 62.4% of individuals aged 15 and above reported using online banking services, compared to 50.6% in 2022–23.
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The survey was conducted during the first quarter of 2025 as part of the 80th round of the National Sample Survey (NSS), covering the entire country except a few villages in the Andaman and Nicobar Islands
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For Prelims: Direct benefit transfers (DBT), Atal Pension Yojana (APY), Pradhan Mantri Suraksha Bima Yojana (PMSBY)
For Mains: GS III - Economy, GS II - Governance
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Previous Year Questions
1.With reference to India, consider the following: (UPSC CSE 2010) 1. Nationalization of Banks 2. Formation of Regional Rural Banks 3. Adoption of village by Bank Branches Which of the above can be considered as steps taken to achieve the “financial inclusion” in India? (a) 1 and 2 only (b) 2 and 3 only (c) 3 only (d) 1, 2 and 3 Answer (d) |
