MUSCAT — Conventional banks operating in the Sultanate can offer Sharia-based financial services upon approval from the Central Bank of Oman (CBO), its Executive President stated here yesterday.
Addressing the Oman investment Forum 2011, organised by MEED Events, Hamoud bin Sangour al Zadjali, also stressed that the imminent introduction of Islamic banking services would help support the country’s economic development.
“With approval from the CBO, all commercial banks operating in Oman can open windows for the purpose of Islamic banking. Oman offers a large potential for the growth of Islamic banking in the future. Islamic banking is expected to complement the conventional banking sector in promoting development in the economy,” Al Zadjali stated.
He said the CBO’s Board of Governors had approved in May the inclusion of Islamic banking in the provisions of the Omani Banking Law, in line with the Royal Directives of His Majesty the Sultan.
Already, the apex bank has approved the establishment of the country’s first Islamic Bank, he said. Bank Nizwa will provide banking services under the Sharia Law, while another new bank, Al Izz International Bank, has been authorised to offer Islamic banking services as well.
Turning to other issues, Al Zadjaly said the Omani banking system remained “sound, resilient and profitable” due to the appropriate regulatory and supervisory policies adopted by the CBO.
“Our commitment to financial stability has been reflected in the fine-tuning of regulatory and supervisory norms for banks from time to time in line with international best practices. As you are aware, in pursuance of our commitment to adopt global best practices in banking regulation and supervision, the CBO has implemented the Basel II capital adequacy framework since January 2007.
Risk-based supervision, which has been introduced on a pilot basis since 2009, will cover the entire banking system by 2012,” the Executive President said.
Furthermore, in order to raise the capacity of banks to face global competition and expand business in a growing economy, the minimum capital requirement for new local banks was raised from RO 50 million to RO 100 million, and for foreign banks from RO 10 million to RO 20 million, he said.
Other measures implemented by the Central Bank have also helped secure local banks against the global financial contagion, Al Zadjali stated.