Oman’s Financial System
Article 1(a) of the Banking Law states one of the objectives of the Law to be as under:
“Promote the development of banking institutions which will ensure the maintenance of monetary and financial stability, contribute to the economic, industrial and financial growth and enhance the position of the Sultanate in international financial affairs”.
The Central Bank of Oman (CBO), established under the Law, adopts a sound licensing policy and prudential regulations and supervision, set proactively, as means to maintain monetary and financial stability, to contribute to the growth and to enhance the Sultanate’s image and reputation. CBO’s efforts will encompass the study of macroeconomic and sectoral dynamics in conjunction with financial soundness indicators and external developments to establish linkages and evolve a suitable model for the behavior of the financial system. The approach and practices, of course, undergo needed periodical reviews for improvement. Prudential requirements are set/re-set in response to changes in needs.
Oman’s financial system consists, mainly, of conventional and Islamic banks, finance and leasing companies, money exchange establishments, investment/ brokerage companies, insurance companies and pension funds.
Entities, coming under the jurisdiction of the CBO, are banks, finance and leasing companies and money exchange companies licensed by it.
As of December 2016, the conventional segment of the banking system includes seven local commercial banks and nine foreign banks (with 470 local branches and five overseas branches and representative offices). There are also two specialized banks (23 domestic branches), six finance and leasing companies (43 branches), sixteen money exchange establishments (317 branches) doing money changing and issue of drafts and 36 money changers doing money changing only.
While one specialized bank caters to housing finance requirements, the other is a development bank focusing primarily on SMEs.
Since authorization of Islamic Banking in 2012, CBO started licensing Islamic Banking Entities to do Islamic Banking on dedicated basis. These have, so far, been in the form of two full-fledged/local Islamic Banks and six Islamic Banking Windows of six local commercial banks –in all having 70 dedicated Islamic Banking - individual branches.