Andaman and Nicobar Islands, once a penal settlement scattered in the Bay of Bengal, has emerged on the Indian banking map as the fairly well-banked union territory. For a population of 3.56 lakh, it has 37 branches of commercial banks operating in and around Port Blair. While the public sector banks dominate with 36 branches, one of the new generation private sector banks has a lone branch supported by seven ATMs. The population served per branch is 15,000 in the main land, here in the picturesque islands there is one branch for every 11,000 persons. According to Census of India:2001- Analytical Report on Household Assets, the percentage of households in Andamans availing banking facilities is 64 as against the national average of 35.5 percent. Surprisingly, accessibility to banking services in this far off union territory appears to be better than that of many other states. The number of deposit accounts crossing 2.14 lakh is not a small achievement for the banks operating here.

Andamans: the background

Indian maritime history reveals that during the later part of the 18th century, Khanoji Angre, the Maratha naval chief, had his base in the Andamans. His warships were ruling the Bay of Bengal, posing a threat to the British and Dutch ships passing to the Far East. Only after his death in 1729, the East India Company could set its foot in the island. It established the penal settlement in 1789. The British government established a number of such penal settlements in different parts of the world including Australia and Singapore. And the government of East India Company was having many prisons in the major towns in India, where it had its presence.

When the banner of revolt was raised under the First War of Independence on 10 May 1857 in Meerut, the East India Company tried to punish the freedom fighters severely. They were imprisoned and treated inhumanly in different jails, which were ‘disastrously over-crowded’ according some of the British historians. Queen Victoria sent to India a Swedish artist, Egron Lundgren to produce a pictorial record of the mutiny-rebellion, like the modern day TV channels sending their TV camera men to the troubled spots. The East India Company found it strategically expedient to deport the freedom fighters to the far off prison in Andaman. The first batch of 200 freedom fighters arrived in Port Blair on 10 March 1858 from Calcutta. The next batch of 733 arrived on 6 April 1858 from Karachi. The details of total number of the freedom fighters deported to this penal settlement thereafter are not available. But descriptions of the inhuman treatment mated out to them during their most uncomfortable voyages from the main land are available in many historical documents. The dreaded cellular jail, which came up in 1906, aptly qualified to be like Dante’s Inferno, on whose doors it was supposed to have been written, “You, who enter here, abandon all hopes.” Many of the undaunted freedom fighters have spent their prison terms in the cellular jail, bravely facing the atrocities of the British jailors. Veer S D Savarkar was one of them, who had spent a decade in jail from 1911 to 1921.

During the Second World War, the Japanese army occupied the Andamans in 1943 and remained there for nearly four years. Netaji Subhash Chandra Bose organised the Indian National Army here. He hoisted the national flag on 30 December 1943 in Port Blair. The nation had to wait for four more years to see Pandit Jawaharlal Nehru unfurl the national flag on the Red Fort in Delhi. Andaman is no more a penal settlement.

Dawn of Independence:

When India gained independence, the total population of the islands was less than 30,000. After the partition of India, the exodus of refugees from Pakistan was one of the most difficult socio-economic problems the independent nation had to face. A large number of them coming from East Bengal were brought to Andamans for settlement. Thousands of families were rehabilitated here, converting some of the forests into agricultural lands. It was a massive rehabilitation programme. Over the years, Andamans have become a miniature India, with people from all parts of the country residing here, speaking different languages. When all the states in India were reorganised on a linguistic basis in 1956, Andaman and Nicobar Island was made a Union territory in the Indian Union. There has been a more than ten ‘fold increase in population since then.

With the dawn of the Planning era, winds of economic change have started blowing over the sleepy islands. While kaidi kappal (prisoners’ ship) was the only means of transport between the island and the main land in the past, Port Blair now appears on the aviation map, having regular air services from Kolkatta and Chennai.

Long before the craze for acquiring huge areas of land for setting up special economic zones crept into the developmental programmes, there was a proposal actively considered for developing a free trade zone in Port Blair. The inspiration for this perhaps, partly came from the free trade zone started in the vicinity of Colombo port in Sri Lanka. Port Blair was envisioned as the Indian counter-part of Hong Kong. This proposal, however, did not materialize, for reasons best known to the planners. Now, surprisingly no land-hungry promoters appear to be interested in developing special economic zones in Andamans.

Andamans attracted the attention of the whole world for the devastation caused by Tsunami in December 2004. Situated as they are in the seismic zone, these islands are prone to earth quakes. The total damage caused by Tsunami is estimated to be Rs.3836 crore. The island’s economy has limped back to normalcy during the last couple of years.

Developmental planning

The planning process in Andamans began only with the second Five Year Plan, as it was a D state prior to 1956. With its classification as a union territory, it entered into the planning era. The size of the second Five Year Plan was a paltry sum of Rs.6.03 crore. The plan outlay rose to Rs.277.75 crore in the Seventh Plan and in the Tenth Plan, it was in the neighbourhood of Rs.2500 crore.

In the late 1980s, the need for setting up a separate corporation for developing and commercially exploiting the natural resources for achieving balanced development of the economy was felt. Accordingly, Andaman and Nicobar Islands Integrated Development Corporation Limited (ANIIDCO) was incorporated on 28 June 1988 under the Companies Act 1956. This corporation was recognised as a state financial institution for extending financial assistance to industrial establishments.
The Eleventh Plan envisages an outlay of Rs.4100 crore. The major thrust areas of the planning efforts are the transport and social service sectors. The outlay for the transport sector is 45 per cent of the total Plan outlay and for the social services sector is 30 per cent. Under transport, shipping development would receive the major share and among the social services, it is education and health. Literacy rates are quite high in these islands; male literacy rate is 86 per cent and female literacy rate is 75 per cent. Interestingly, the rural female literacy rate also is equally high.

According to the Economic Survey of Andaman and Nicobar Island 2007-08, the per capita income in Andamans has been consistently higher than that of the national average. In 1999-2000, the per capita income of the islanders in constant prices was Rs.24,005, while it was Rs.15,881 in the mainland. The latest available data relating to 2005-06 also reveal a similar difference in the income levels. While the per capita income has gone up to Rs.28, 637 for the islanders, their counter-parts on the mainland have a per capita income of Rs.20,858 only.

Though nearly 86 per cent of the total geographical area is covered by forests, the contribution of the primary sector to the gross domestic production is lower than that of the tertiary sector.

Banking development

The first bank to extend banking facilities in Andamans is State Bank of India, which opened its first branch in Port Blair. It has extended its network since then to 18 branches spread out in the islands. Syndicate Bank is the second bank to enter the islands opening its first branch on 17 September 1969 in Port Blair. It now has nine branches including one in Campbell Bay in Car Nicobar island opened in 1973. Some of the branches are situated in villages away from the capital town. Visiting one such branch of Syndicate Bank in Ferarganj in the 1970s, the author has seen arrow marks on the wooden walls of the branch, the remnants of the attack made by the hostile tribal group at night.

Banking development in the islands has started only after the public sector banks ventured into these picturesque islands. Besides State Bank of India and Syndicate Bank, there are eight other public sector banks having single branches here – Allahabad Bank, Bank of Baroda, Canara Bank, Indian Overseas Bank, Punjab National Bank, UCO Bank, United Bank of India and Vijaya Bank. The total number of branches of the public sector banks is 36.

There is only one private sector bank of the new generation having a branch in Port Blair – Axis Bank Ltd. Its branch was opened in 2004. This single branch has a total deposits of Rs.77 crore and advances of Rs.11 crore. Total deposits mobilised by all the branches in the islands is Rs.1166 crore as on June 2008 and the amount of credit outstanding is Rs.346 crore. The credit-deposit ratio remains very low at around 28 percent.

One of the peculiar features of credit disbursement and credit utilisation in Andamans is that the credit utilisation here is more than credit sanctioned by the local branches, as revealed by the published data available in the latest issue of Basic Statistical Returns of Scheduled Commercial Banks in India: March 2007. While the amount of credit sanctioned by the branches operating in the union territory is Rs.279.55 crore, the total credit utilised by them is higher at Rs.571.65 crore. This is due to the utilisation locally an additional amount of Rs.296.14 crore, sanctioned by the branches located in other states. Some of the local commercial establishments and transport operators have credit limits sanctioned by the banks located in Kolkata or Chennai and availed by them in the island branches of the respective banks. As a result, the credit-deposit ratio goes up to56.6 per cent.

Savings bank deposits constitute a significant proportion, both in terms of the number of accounts and the amount mobilised. Out of the 2.14 lakh deposit accounts, 1.56 lakh accounts are savings bank accounts and the amount involved is Rs.381.06 crore. The low cost deposits, savings and current, account for 39 per cent of the total deposits. Small savings appears to be quite popular with the islanders. Pigmy deposit scheme of Syndicate Bank, which is one of the time-tested tiny deposit schemes incorporating some of the features of micro-finance, has many subscribers in the islands. It was once observed that the amount of commission earned by the Pigmy collector here was higher than the salary of the branch manager.

While there has been substantial growth in agricultural advances during the last decade, the number of borrowing accounts in this sector has declined. Industrial advances have made marginal progress. It is the personal loans segment that has made tremendous increase; number of accounts have increased from hardly 3000 in 1998 to nearly 13 000; advances have surged from Rs.5 crore to Rs.149 crore. Housing loans and retail loans have changed the composition of the credit pattern in these islands. Tourism is one of the drivers of economic development, which has to be carefully nurtured by planners and the banks. The neo-rich on the mainland now plan to spend their holidays in the far off exotic beaches all over the world. Andamans has some picturesque beaches which could be made the destination of beach-lovers. Beach resorts have to be set up without disturbing the ecological balances.

In a rare gesture, the Reserve Bank of India has held the first ever meeting of its Central Board of Directors at Port Blair on 16 February, 2006.And considering the high level of literacy and bank network coverage in the islands, it was felt that the banking system should work towards 100 per cent financial inclusion in the Islands.