Putting a Number on Financial Inclusion in India

> Posted by Jeffrey Riecke, Communications Assistant, CFI


Last week Indian rating agency CRISIL, with support from India’s Ministry of Finance and the Reserve Bank of India, launched the CRISIL Inclusix index, a new tool for tracking financial inclusion throughout the country. Developed over the past two years from over two million data points collected from 165 banks, the index assesses financial inclusion at the district, state, and country level, as well as the reach achieved by individual banks.

The index is based on a scoring system from 0 to 100, incorporating branch, deposit, and credit penetration into one metric. As more data becomes available, the index will integrate additional areas, such as the availability of microfinance and insurance products. The aim of the index is to provide a means for financial inclusion stakeholders to monitor progress, identify priority areas, and inform future efforts.

The index was released in conjunction with a new report from CRISIL on the state of inclusion in India. Drawing from the data used to develop the index, the report’s gives the country as a whole a score of 40 for 2011, with a total of 624 million saving accounts and 160 million loan accounts. This equates to roughly one in two Indians having a savings account and one in seven having an outstanding loan. Inclusion in the country has expanded in recent years, however, as the country average for 2009 was 35.

Strong inclusion discrepancies were exhibited across different areas of India. At the region level, the southern portion of the country leads with a score of 62, followed by the west with 38, and the north and east with 37 and 29, respectively.

For more on the index and report, please see CRISIL’s website. For more ways to examine financial inclusion in India, check out MIX’s India Map of Financial Inclusion, or our Mapping the Invisible Market project’s interactive Country Profiles tool.

Image credit: CRISIL