Financial Inclusion

CRISIL develops India’s first comprehensive financial inclusion index

Early this month CRISIL launched the CRISIL Inclusix, an index that measures progress in financial inclusion across the country. The index, along with a report on the state of financial inclusion in India, was launched at a function in New Delhi. CRISIL has developed this index as part of its corporate social responsibility agenda, with support from the Reserve Bank of India (RBI) and the Ministry of Finance.

crisil financial inclusion

Speaking at the launch function, Shri Chidambaram said, “With CRISIL Inclusix, stakeholders now have a tool to set objective performance targets and regularly monitor their progress and achievements. Since the index would also enable inter-spatial comparisons across states and districts, I am sure it would encourage healthy competition to achieve financial inclusion targets. I congratulate CRISIL for conceptualising this useful composite index and bringing it to fruition.”

CRISIL Inclusix is a one-of-its-kind tool to measure the extent of inclusion in India, right down to each of the 632 districts. It uses a statistically robust, transparent, and easy-to-understand methodology. CRISIL Inclusix is a relative index on a scale of 0 to 100, and combines three critical parameters of basic banking services —branch penetration, deposit penetration, and credit penetration —into one metric. Over time, as consistent and comprehensive data becomes available, additional services like insurance, microfinance, etc. can be added.

Financial Inclusion Index – India

Said Ms. Roopa Kudva, MD and CEO, CRISIL, “In creating this index, we have leveraged our knowledge of the financial services sector and expertise in creating world-class analytical frameworks and indices. Besides measuring inclusion at the district, state, and national levels, the index can be used to compute progress on financial inclusion by each bank.” The index is an outcome of nearly two years’ effort in developing the methodology and rigourous analysis spanning 2,00,000 data points from 165 banks. RBI provides the data used for index computation.

Crisil Inclusix

CRISIL Inclusix will enable policy makers, regulators, and bankers to identify priorities to improve financial inclusion, design focused initiatives to push the inclusion agenda, and most importantly, measure the progress made. Added Ms. Kudva, “I hope that as a robust and independent tool, CRISIL Inclusix can play a vital role in accelerating the pace of financial inclusion in the future.”

The accompanying report highlights many hitherto unknown facets of inclusion in India. It contains the first regional, state-wise, and district-wise assessments of financial inclusion ever published, and the first analysis of trends in inclusion over a three-year timeframe. Some key conclusions from the study are:

The all-India CRISIL Inclusix score of 40.1 is low, though there are clear signs of progress – this score has improved from 35.4 in 2009.

Deposit penetration is the key driver of financial inclusion – the number of savings accounts (624 million), is almost four times the number of loan accounts (160 million).

618 out of 632 districts reported an improvement in their scores during 2009-2011.

The top three states are Puducherry, Chandigarh, and Kerala; the top three districts are Pathanamthitta (Kerala), Karaikal (Puducherry), and Thiruvananthapuram (Kerala).

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