Crisil Inclusix, financial inclusion, index shows highest rise in 3 years

Written by PTI | New Delhi | Updated: Dec 31 2013, 02:50am hrs
Ratings firm Crisil today said improvement in financial inclusion in the country led to an increase in financial inclusion index, Inclusix, by 2.7 per cent.

The index was based on the latest data (as on March 31, 2012) provided by the Reserve Bank of India. The index measures financial inclusion up to the level of each of the 638 districts in India.

The score was the highest since 2009, Crisil said in a release.

"India's overall Crisil Inclusix score has risen by 2.7 in fiscal 2012 the highest annual increase since 2009. As many as 587 out of a total 638 districts in India and 34 out of 35 states and Union territories improved their scores, reflecting a broad-based improvement in financial inclusion," Managing Director & CEO Roopa Kudva said.

It said there was a growing momentum in financial inclusion due to a significant rise in new savings account across North, South, East, West and North-East.

"Overall, 79 million new savings accounts were opened in fiscal 2012, 12.6 per cent more than in fiscal 2011," it said.

Also, agricultural credit accounts grew at 11.1 per cent, the most since fiscal 2009. The number of bank branches in the bottom 100 districts increased by 6 per cent, faster than the all-India growth of 5.6 per cent.

Citing reasons behind the raise in index, it said new deposit accounts in north, south and east region led to 42 per cent increase in the Crisil Inclusix.

The north added 2.4 million new credit accounts contributing to 11 per cent rise in the index and addition of 30 per cent of the 5,125 new branches in south lead to 9 per cent increase in the index.

Also, the credit penetration in the top 50 districts jumped significantly as small-borrower accounts surged.

However, it said at 42.8 on a scale of 100, the all-India Crisil Inclusix score reflects under-penetration of formal banking in the country.

"Just one in two Indians have a savings account and one in seven has access to bank credit. There are wide disparities in access to financial services, too."

It said the six largest cities in the country have 10 per cent bank branches, the bottom 50 districts have merely 2 per cent of the bank branches.

"To speed up inclusion, financial services need to flow beyond the south and the large cities. Specifically, policy makers will have to incentivise expansion of banking services in the districts that have low Crisil Inclusix scores through an increase in branch network and partnerships with other players," Kudva said.

READ FULL REPORT: CRISIL Inclusix 2012 scores released today; index shows highest rise in 3 years

CRISIL today released the latest scores for CRISIL Inclusix, its financial inclusion index, based on the latest data (as on March 31, 2012) provided by the Reserve Bank of India. The index measures financial inclusion up to the level of each of the 638 districts in India.

Says Roopa Kudva, Managing Director & CEO, CRISIL: Indias overall CRISIL Inclusix score has risen by 2.7 in fiscal 2012 the highest annual increase since 2009. As many as 587 out of a total 638 districts in India and 34 out of 35 states and Union territories improved their scores, reflecting a broad-based improvement in financial inclusion.

The growing momentum in financial inclusion can be seen in the following trends:

1. A significant rise in new savings accounts across the 5 regions north, south, east, west and north-east. Overall, 79 million new savings accounts were opened in fiscal 2012, 12.6% more than in fiscal 2011.

2. Agricultural credit accounts have grown at 11.1%, which is the most since fiscal 2009.

3. The number of bank branches in the bottom 100 districts has increased by 6%, faster than the all-India growth of 5.6%.

The four key elements driving the CRISIL Inclusix score up by 2.7 in fiscal 2012 were:

1. New deposit accounts in three regions north, south and east. This contributed 42% to the rise in CRISIL Inclusix.

2. The north, by adding 2.4 million new credit accounts, contributed 11% to the indexs increase.

3. Almost 30% of the 5,125 new branches were added in the south, which contributed 9% to the increase.

4. Credit penetration in the top 50 districts jumped significantly as small-borrower accounts surged.

Nevertheless, at 42.8 on a scale of 100, the all-India CRISIL Inclusix score reflects under-penetration of formal banking in the country. Just one in two Indians have a savings account and one in seven has access to bank credit. There are wide disparities in access to financial services, too. While Indias six largest cities have 10% of Indias bank branches, the bottom 50 districts have merely 2% of the bank branches.

To speed up inclusion, financial services need to flow beyond the south and the large cities.

Specifically, policy makers will have to incentivise expansion of banking services in the districts that have low CRISIL Inclusix scores through an increase in branch network and partnerships with other players, Kudva said.

About CRISIL Inclusix CRISIL Inclusix is a unique index to measure the extent of financial inclusion in India across its 638 districts. It uses a statistically robust, transparent, and easy-to understand methodology. It 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 become available, additional services such as insurance, non-banking financial services and microfinance could be included in the index.