billion pieces valued at 168 billion. as the demand for notes and coins is subject to diverse socio - economic, behavioural and other often unpredictable factors, the task of forecasting demand for currency is a challenging task and can be subject to large variations. at present, the system poses considerable difficulties in capturing the structural and cyclical demands for currency and projecting demand with precision. i would, therefore, also take this opportunity to extend an invitation to the delegates present here to come forward and see if they can work with us for making accurate projections for the demand of banknotes and coins. 8. the other challenges in currency management relates to ensuring durability of banknotes, ensuring adequate supply of all denominations, improving operational efficiency in distribution of notes by controlling cost of handling, distribution and security in transit / storage, providing last mile connectivity at reasonable cost, ensuring equity in distribution and repositioning rbi as an upstream facilitator in the fresh note / coin supply chain, rather than as a retailer with limited reach. let me highlight the challenge associated with durability of the banknotes in india by giving some figures. we in india, withdraw more number of banknotes from circulation than the number of banknotes collectively produced by all countries taken together with the exception of china. in fact, we are constrained to withdraw over 75 % of all notes that we circulate every year as may be seen from the table below : 9. such massive withdrawal of banknotes from circulation not only means additional cost for printing of fresh notes but also additional requirement of various resources used in production of banknotes. in this context, it becomes imperative that efforts are made to enhance the durability of the banknotes so that not only the wastages are reduced, but also resources are utilized in a sustainable manner, thereby ensuring that the environmental footprint of our currency management operations is minimized. 10. mechanization of soiled note processing while augmenting capacity has also thrown up new challenges like ensuring standardization of machine parameters, slow progress in improvement in processing capacity by commercial banks and security risks on account of manual intervention. another challenge with the likely potential to evolve into a reputational risk for rbi is the shortage / “ perceived ” shortage of coins and the lack of understanding on the exact role of the central bank in its distribution. it needs to be understood that while the bis central bankers ’ speeches responsibility for issue of coins is that of the government of india ( goi ), rbi ’ s role

remote areas. a discussion paper on this scheme was placed on rbi website in june 2008 for public comments. the comments received were examined and the modalities of implementing the incentive scheme are being worked out in consultation with the indian banks ’ association. i would, however, like to take this opportunity to encourage the banks to be in readiness to embrace this latest technology for further improving the delivery of banking services, especially in the remote parts of the country, with a view to enhancing financial inclusion. financial inclusion 15. last but not the least, let me now dwell briefly on the issue of financial inclusion, in which the banks have a major role to play. given the socio - demographic complexities in india, the policy endeavour of the rbi has been to adopt a multi - institutional and multi - instrument approach to comprehensively address the issue of financial inclusion in all its dimensions, going beyond mere availability of credit to the masses. the term ‘ financial inclusion ’ needs to be understood in a broader perspective to mean the provision of the full range of affordable financial services, viz., access to payments and remittance facilities, savings, loans and insurance services by the formal financial system to those who tend to be excluded from these services. the rbi, while recognising the concerns in regard to the banking practices that tend to exclude rather than attract vast sections of population, has been urging the banks to review their existing practices to align them with the objective of achieving greater financial inclusion. the rbi too has taken a number of measures with the objective of attracting the financially excluded population into the formalised financial system. let me briefly recount some of the measures taken in this direction. with a view to achieving greater financial inclusion, banks were advised in november 2005 to make available a basic banking ‘ no frills ’ account either with ‘ nil ’ or very low minimum balances as well as charges that would make such accounts accessible to vast sections of population. all the public and the private sector banks as well as the foreign banks, except those not having significant retail presence, are reported to have introduced the basic banking'no - frills'account. with the objective of providing hassle - free credit to the banks ’ constituents in rural and semi urban areas, the banks were advised in december 2005, to consider introduction of a general credit card ( gcc ) to such constituents. the card was to have a credit limit of up to rs. 25000 / -, based on the assessment of income