Financial Inclusion Index (FII)

02.08.2025

Financial Inclusion Index (FII)

Context      

The Reserve Bank of India (RBI) released the latest Financial Inclusion Index (FII) in July 2024, highlighting progress and challenges in delivering banking and financial services to underserved populations across India.

About the News

• FII is developed by the RBI to measure inclusive financial progress.
   
• Covers banking, insurance, credit, pension, and digital payments.
   
• Scores range from 0 (exclusion) to 100 (complete inclusion).
   
• Base year for computation is 2019–20.
   

Major Government Schemes for Financial Inclusion

India has launched several focused schemes to ensure wider access to financial services:

• Jan Dhan Yojana: Opened zero-balance bank accounts with RuPay cards, insurance, and overdraft; over 50 crore accounts opened by 2024.
   
• MUDRA Yojana: Provides loans up to ₹10 lakh for small, non-corporate enterprises under Shishu, Kishor, and Tarun categories.
   
• Atal Pension Yojana: Ensures pension for unorganised workers through regular contributions linked to bank accounts.
   
• Digital India & UPI: Enabled widespread access to digital transactions, boosting financial inclusion at the grassroots.
   
• Suraksha Bima Yojana: Accident insurance of ₹2 lakh for a yearly premium of just ₹12.
   
• Jeevan Jyoti Bima Yojana: Life insurance of ₹2 lakh for ₹330 per year, aimed at low-income individuals.
   

Challenges

• Dormant accounts, especially under PMJDY, remain unused.
   Reflects lack of financial engagement despite account ownership.
   
• Gender imbalance in banking access persists.
   Fewer women hold or use bank accounts actively.
   
• Poor connectivity in tribal and remote areas.
   Leads to lack of ATMs, branches, and BC coverage.
   
• Cybersecurity and fraud risks in digital payments.
   Threatens trust in mobile banking and UPI platforms.
   

Way Forward

• Strengthen financial literacy through targeted rural programs.
   Helps users understand savings, credit, and insurance products.
   
• Expand ATM and BC network in remote districts.
   Improves access where banking infrastructure is absent.
   
• Empower women via targeted credit schemes.
   Close gender gap through SHGs and microloans.
   
• Enhance cybersecurity in digital banking systems.
   Build user trust and protect digital finance platforms.
   

Conclusion

The Financial Inclusion Index serves as a comprehensive tool to assess India's financial progress, but to ensure equity and empowerment, efforts must go beyond infrastructure, focusing on usage, quality, and digital security, especially for vulnerable and rural populations.