, istisna, musharaka etc. ) the risk is the expected variance in the measure of profit distribution between iah and bank. ifis have to recognize that this uncertainty or mudarabah risk can arise from a variety of factors both systemic as well as bank specific. risk mitigation for iah can be achieved through use of profit equalization reserves ( per ), investment risk reserves ( irr ) and by variation in modarib ’ s share. 2 at the same time regulatory regime, needs to offer perspectives on risk determination and capital assignments for the high exposures ifi ’ s face because of their excessive reliance on murabah and other trade and sales based transactions backed which are prone to higher degree of volatility and appropriate weights have to be assigned for both associated commodity pricing and counter party risks. while adopting a suitable risk mitigation technique, comprehensive and transparent disclosure of “ … … risk profile, risk - return matrix, and internal governance is critical. among others, this requires coordination of supervisory disclosure rules, and accounting standards, and proper differentiations between consumer friendly disclosures to assist iahs and market - oriented disclosures to inform markets. ” 3 in this regard, ifsb guiding principles on risk management has served a good purpose. they provide guidance for different risks to which if industry is exposed and offers guidance on the methodology for credit risk, market risk, liquidity risk, operational risk, equity investment risk and rate of return risk for different types of financial transactions. we are in the process of adapting these guidelines for islamic banking institutions in pakistan. finally, as the if industry diversifies, it will face increasingly more diverse range of risks associated with investment banks, mutual insurance ( takaful ), and investment companies. islamic banks, however, remain the core of the industry in many countries and offshore financial centers and account for the bulk of financial transactions and their soundness would remain a key concern for systemic stability. in islamic banking, the management of risks becomes more challenging due to its peculiar risk characteristics in line with the requirement for compliance to shariah principles. while the basel ii initiatives on the identification of credit, market and operational risks can be assimilated into islamic banking, the initiatives have to be complemented with consideration of the other dimensions of risks that are inherent in the if transactions. fourth, for effectiveness of if development, it is desirable that eventually model legislation is developed for ifs to recognize different institutions and products. this

provide insights on financial literacy and consumer protection issues. branchless banking has also proved to be an effective instrument for channelizing the government to persons ( g2p ) payments in trying times like serving the internally displaced persons ( idps ), during the devastating floods over the last three years. further, bisp beneficiaries are also being served very effectively through the same mechanism as well. in the coming days, this channel is expected to continue playing an important role towards the promotion of financial inclusion and the management of government to person ( g2p ) programs like salaries disbursements, pensions, bisp, watan cards, pakistan cards and tax collections services, etc. we are confident that the branchless banking deployments can cater to the needs of over 10 million potential beneficiaries of g2p payments in pakistan. the state bank will continue to play its role in promoting an environment which is conducive for financial innovation. at the macro level, we will continue to work with the industry and the other regulators to promote a sound, safe, efficient and inclusive mobile commerce ecosystem. our aim is to provide at least basic banking services to every adult and bankable citizen. today, as a large portion of our populations has access to mobile phones, we feel that if a workable partnership between the banking and telecom sectors continue, we shall see our dreams come true. on this front, we are already working closely with pakistan telecommunication authority and have also signed an mou for enabling the interoperability framework where all banks and telcos can join hands to serve the customers. we are also in the final stages of formulating the regulatory framework for interoperable mobile banking system. interoperable systems are essential to mass adoption of mobile commerce. at present, financial institutions and telcos can choose whatever business model suits their needs i. e. one - to - one or one - to - many ; however, i can foresee that in future, only interoperable solutions shall fasten both scalability and viability. here, let me assure that all bis central bankers ’ speeches the existing and the prospective one - to - one or one - to - many arrangements between banks and the telcos would not be affected with the proposed regulatory framework. i must acknowledge the efforts and initiatives adopted by ministry of information technology and the pta towards the promotion and development of mobile banking in the country. it is heartening to see that pta is playing an important