Financial inclusion key issue in measurement: RBI
Dr K C Chakrabarty, Deputy Governor of the Reserve Bank of India addressing at the Bank for International Settlements-Central Bank of Malaysia Workshop on “Financial inclusion indicators” said the importance of financial inclusion, based on the principle of equity and inclusive growth, has been engaging the attention of policy makers internationally.
Achieving universal financial inclusion is, indeed, a global objective and has multiple dimensions. While each jurisdiction will, perhaps, evolve its own delivery model, we need to learn from each other and implement what is suitable in each constituency. The Irving Fisher Committee is engaged in statistical issues that are of interest to central banks worldwide. As we all know, Irving Fisher was not only a celebrated economist who gave us the Fisher equation of money and the theory of real interest rates, he was also a pioneer in the development of the theory of index numbers. He once observed one of my chief objects has been to help make economics into a genuine science through careful and sound analysis, usually carried out with the help of mathematical methods and statistical verification.”2 I trust this workshop will help provide practical perspectives on the critical dimensions of measuring the depth of financial inclusion as also help streamline data availability and related issues. As the program structure aptly notes, financial inclusion principles and approaches have assumed an increasingly active role at the international level in developing new research agenda, setting standards and promoting best practices to improve financial inclusion. The focus on financial inclusion measurements and data gaps, that this Workshop seeks to achieve, is very much timely and important.
The agenda of this workshop is very appropriate as currently we lack reliable and granular data on financial inclusion, which restricts our ability to fully gauge the extent of exclusion and the ground-level impact of the initiatives being undertaken. We need to work out appropriate data structures and associated analytical frameworks for effective policymaking and the standardisation of various approaches at the national, regional and global levels.
He said in order to appreciate the measurement and data needs, a broad understanding of the policy initiatives is important. Against this background, I propose to briefly focus on: Approaches to financial inclusion – some international / national initiatives, Conceptual framework for measurement and analysis of financial inclusion, International initiatives in measuring financial inclusion and Indian perspectives.
The origins of the current approach to financial inclusion can be traced to the United Nations
initiatives, 3 which broadly described the main goals of inclusive finance as access to a range of financial services including savings, credit, insurance, remittance and other banking / payment services to all “bankable” households and enterprises at a reasonable cost.
The Report of the Centre for Global Development (CGD) Task Force on Access to Financial Services ( October, 2009) 4 has laid down the broad policy principles for expanding financial access, including institutional mechanisms, with particular emphasis on the need for ensuring data collection, monitoring and evaluation.