Addition of MFIs for the first time makes CRISIL Inclusix more representative
CRISIL released updated scores for CRISIL Inclusix, an index that measures financial inclusion up to the level of each of the 652 districts in India. The index is based not only on the latest data (March 2013) provided by the Reserve Bank of India (RBI), but also for the first time includes the contribution of microfinance institutions (MFIs) with effect from fiscal 2013. Data on MFIs was provided by the Micro Finance Institution Network (MFIN), the self-regulatory body recognised by the RBI.Continued progress in banking services and addition of MFI data helped CRISIL Inclusix register a score of 50.1 at the end of fiscal 2013. The index stood at 42.8* at the end of fiscal 2012.
MFIs play a key role in financial inclusion by lending to the poor in deep hinterland. They boost the credit penetration score, bringing it closer to the two other dimensions of financial inclusion - branch penetration and deposit penetration. Says Raman Uberoi, President, Corporate Affairs, CRISIL: With the incorporation of MFI data, CRISIL Inclusix now better represents the ground-level picture of financial inclusion in India. The index's scalable and modular architecture facilitated the inclusion of MFI data.
The highlights of India's financial inclusion march in fiscal 2013 are:
1. Banking services continues to gain ground, with the number of savings accounts and bank branches registering their fastest growth in 4 years
2. Deposit penetration remains the key driver of financial inclusion
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3. MFIs have helped underpenetrated regions of east and north-east to play catch-up with north.
4. Among states, West Bengal benefited the most because of the presence of large MFIs, while Jammu & Kashmir improved substantially as credit accounts surged. Tamil Nadu moved into the top three for the first time driven by an increase in deposits
5. In as many as nine districts, CRISIL Inclusix hit the maximum score of 100
Overall, however, basic financial services remains underpenetrated. One-third Indians did not have a bank savings account at the end of fiscal 2013, while only one in seven had access to credit.
Going forward, we expect tailwinds to financial inclusion from policy steps taken such as the Pradhan Mantri Jan Dhan Yojana (which has not been factored in this edition of Inclusix), and differentiated banking licences. Under Jan Dhan Yojana, more than 14 crore new savings accounts have been opened, which will add to the Inclusix score for 2015, said Uberoi.
*It is important to note that the index values for the two years are not directly comparable, as data for MFIs is available only for the fiscal 2013.
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