report of the working group on improvement of banking services

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Chapter 1
INTRODUCTION
The Union Territory <strong>of</strong> Lakshadweep
1.1 Lakshadweep, an archipelago <strong>of</strong> 36 small and tiny islands, located at 220 to 440 kms. away from <strong>the</strong>
mainland in South Western India, is <strong>the</strong> tiniest Union Territory <strong>of</strong> India with just 32 square kilometers in area
and a population <strong>of</strong> 60,650 (2001 census). It is spread largely over 10 inhabited islands (11, including
Bangaram), 16 uninhabited islands, 3 reefs and 6 submerged sand banks. Even though <strong>the</strong> land area is very
small, it is surrounded by lagoons, measuring 4,200 sq. kms. and <strong>the</strong> territorial waters, measuring about
20,000 sq. kms. Fur<strong>the</strong>r, it has access to 4 lakh sq. kms. <strong>of</strong> Exclusive Economic Zone (EEZ). These features
make <strong>the</strong> islands, though very small in land area, a ra<strong>the</strong>r large overall territory. These islands are strategically
very important to <strong>the</strong> country for security reasons. They are also ecologically fragile. At <strong>the</strong> same time
abundant potential exists for development <strong>of</strong> <strong>the</strong> fisheries, agriculture (coconut) non-farm sector activities such
as coir and tourism sectors. There is immense scope for value addition in <strong>the</strong>se areas while simultaneously
preserving <strong>the</strong> ecology <strong>of</strong> <strong>the</strong> islands and keeping in view <strong>the</strong>ir strategic importance. A basic requirement for
<strong>the</strong> economic activities to take <strong>of</strong>f would be <strong>the</strong> development <strong>of</strong> transport and communication facilities, <strong>the</strong>reby
bridging <strong>the</strong> 'distance gap' between <strong>the</strong> islands and <strong>the</strong> mainland. Once <strong>the</strong> economic activities take <strong>of</strong>f, <strong>the</strong>re
would be enough scope for expansion <strong>of</strong> banking services in <strong>the</strong> islands and <strong>the</strong> banking sector would be able
to significantly contribute to <strong>the</strong> healthy economic development <strong>of</strong> <strong>the</strong> area, mainly through value addition and
realization <strong>of</strong> <strong>the</strong> economic potential <strong>of</strong> <strong>the</strong> islands to a much greater extent.