deepak mohanty : economic and financial developments in andaman and nicobar islands speech by mr deepak mohanty, executive director of the reserve bank of india, at andaman chamber of commerce and industry, port blair, 22 december 2011. * * * the assistance provided by dr p k nayak and shri suraj s is acknowledged. i thank the andaman chamber of commerce and industry for inviting me to address this distinguished gathering. this picturesque union territory ( ut ) of andaman & nicobar islands ( ani ) in the bay of bengal covers 0. 25 per cent of the national geographical area but accounts for only a fractional share of 0. 03 per cent of national population. this explains why ani has the lowest population density of 46 per square kilometre as against 382 at the all - india level. the high literacy rate and per capita income make ani as one of the leading uts in india in terms of socio - economic developments. further, the lushness of its landscape with bio - diversity and attractive spots for eco - tourism make it a prime tourist attraction. notwithstanding these social and geographical advantages, ani faces several developmental challenges, especially in the aftermath of tsunami that wreaked large - scale damage in december 2004. apart from natural and rich human resources, it is important to have a well - functioning financial system for sustainable economic development. in recognition of this, the reserve bank has stepped up its efforts in recent years to enhance the penetration of the formal financial sector and promote financial inclusion with a view to improving the well - being of our society. in this regards, the reserve bank has been undertaking special initiatives for extending the outreach of banking facilities in states and union territories. against this backdrop, i propose to briefly outline the economic and financial structure of the ut of ani as well as highlight various financial inclusion initiatives taken by the reserve bank. in conclusion, i shall flag some issues that need policy attention. background andaman & nicobar islands, a union territory of india since 1956, is an archipelago of 572 islands ( 306 islands and 266 rocks ) and has a geographic area of 8, 249 square kilometre. of these islands, only 38 have human habitation. the ut is bestowed with abundant green vegetation and marine wealth besides huge potential for culture fisheries. it covers the indian subcontinent ’ s richest rain - forest and houses indigenous tribes of negroid and mongoloid origins. the diversified mangroves have been included in the world wildlife fund ( wwf ) global

was a gradual improvement of banking penetration in ani in recent years. this is evident from the fact that the average population per bank branch improved to11, 000 at end - june 2010 from 13, 000 at end - june 2002. the banking network is largely dominated to public sector banks. bis central bankers ’ speeches the recent trend in the growth rate of deposits in ani was lower than the corresponding growth rate recorded at all - india level. the credit deposit ( c - d ) ratio in ani at 37. 6 per cent at end - december 2010 was significantly lower than the ratio of 76. 7 per cent at the all - india level ( chart 2 and table 7 ). table 7 c - d ratio by population group as at end - march 2010, almost 58. 3 per cent of total priority sector advances were absorbed by small enterprises. agriculture accounted for only 8. 3 per cent of total priority sector advances during the same period. the occupational credit structure is dominated by personal loans, followed by advances to trade and industry ( chart 3 ). chart 3 occupational credit financial inclusion in the context of financial inclusion initiative taken by the reserve bank, the banks are being sensitised to pursue the inclusive drive. it may be observed that the progress of banking in terms of the branch expansion was stagnant during the period 2007 to 2010 though there was an improvement in terms of deposits and credit expansion. due to the recent initiatives bis central bankers ’ speeches taken by the reserve bank, the number of branches has increased from 37 in 2010 to 42 in 2011 ( chart 4 ). source : bsr, rbi. further, in pursuance of the overall financial inclusion strategy, a total of 47 villages with population over 1, 000 were identified in the three districts of ani. of these, 17 villages have been identified in south andaman, 21 in north and middle andaman and 9 in nicobar. a total of 37, 370 no - frill accounts have been opened up to end - june 2011 in ani. as at end - march 2010, the total number of kisan credit card ( kcc ) issued in ani was 7, 000 and the amount of loan sanctioned under the scheme was 158 crore. as at end - june 2011 a total of 9. 5 crore was disbursed to 1260 shgs. financial inclusion measures financial inclusion is important for bringing the poor and under - privileged sections of the society within the banking fold and thereby generating and sustaining