liability to the customer. let me now turn to the issue of technology and cost. before i speak my mind on the issue, let me make it very clear that rbi does not support the argument that cash transactions in this country will disappear rapidly or that all paper based transactions would turn electronic if the financial sector was to offer electronic transactions free of cost. in fact, we firmly believe that anything that is offered free of charge can never be scaled up and that it cannot become bis central bankers ’ speeches robust and efficient unless it offers commercial viability to those who offer the product / service. having said that, i also do not support the principle, ostensibly being followed by some of the institutions, to recover a large part of technology expenses from the customers. i was amused at the action of banks deciding to waive charges on “ inter - core ” transactions hitting headlines in the media. it should have never happened in the first place. in fact, such charges, rather than their removal, should have hogged the limelight. further, in an electronic banking scenario, ad valorem charge to customers is an issue which needs to be relooked. in fact, in a country like ours, part of the cost efficiencies achieved through technology must be passed on to the smaller customers. this calls for a rejig in the way in which banks approach technology. in a technology led financial sector, collaboration among all stakeholders, including competitors, could prove to be the big cost saver. with rapid strides in security standards and capabilities, such a collaboration and sharing of it infrastructure is feasible on a much larger scale than is happening today. it is always perceived by the industry that the handholding / intervening by rbi is necessary for the systems to be operational in an efficient manner. i am unable to understand why collaborative approach cannot be the guiding force for success in adoption of shared it infrastructure. reserve bank has contributed to the fostering of innovative methods to improve access to financial services through mobile and opened up and clarified the issue of business correspondent ( bc ) interoperability. leveraging technology for making financial inclusion possible and a success prior to the enablement of bc interoperability, the banks and technology providers had made a case that it was the lack of interoperability, that was a deterrent for financial inclusion and hence, much headway had not been achieved. according to the technology providers, investment in a non - interoperable technology would be a costly proposition and they did not see

well as to actively promote the role of the market players. development of a wider range of islamic financial instruments for islamic financial institutions to effectively manage its funds, there is a need to have diversity in the type and the maturity of the islamic financial instruments. this is one area in islamic finance that offers formidable challenges and opportunities to market participants in malaysia. a broader range of products and services is vital in this fast changing global financial landscape. in today's marketplace, there are only a number of islamic financial instruments that have been developed to cater for this need which for the most part constitutes straight private and government islamic papers. in a bid to deepen and broaden the islamic bond market, the government has been regularly issuing islamic and conventional securities with different maturities, enabling the creation of a benchmark yield curve. this was further enhanced with the introduction of an auction calender in the year 2000. in the 2000, government investment issues or giis were introduced, followed by islamic negotiable notes, private debt securities, treasury bills and sukuk. furthermore, following the amendment to the government investment act in year 2005, the government has started issuing shorter - term islamic treasury bills and longer - term sukuk or islamic bonds with a maturity of 10 years in order to further diversify the islamic financial instruments available for investors. under the act, the government is able to issue islamic instruments under various shariah principles and for different tenures ; short and long term, to meet the varying needs of investors. islamic private debt securities ( pds ) too have been fast growing in importance and size, accounting for 50 % of the total pds market in 2004. despite these developments, there has been an inadequate supply of short - term islamic instruments thereby providing less flexibility to the institutions in managing their asset and liability profiles. this is important as the islamic banking institution has, to a large extent of its portfolio, long - term assets that include long - term islamic housing mortgages and long - term islamic financial instruments. these two asset classes constitute approximately 80 % of their portfolio. this over - concentration warrants the need to have effective risk mitigating techniques and instruments as to avoid any potential adverse consequences that could occur in volatile market conditions. on major importance is the elimination of uncertainties from a particular transaction. the need for islamic hedging instruments in the islamic financial services industry has therefore become increasingly important. thus far, significant progress in this area has yet to be made. it is