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البنــك المركــــزي العمـــاني Central Bank of Oman
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CBO Issues Regulatory Amendments to Improve Banking and Business Environment in Sultanate4/2/2018 8:00:00 PMCBO Issues Regulatory Amendments to Improve Banking and Business Environment in SultanateAs part of Central Bank of Oman's endeavor and its continuous efforts to contribute in the economic development of the Sultanate, the Central Bank has issued a number of regulatory amendments,<p style="text-align:justify;">As part of Central Bank of Oman's endeavor and its continuous efforts to contribute in the economic development of the Sultanate, the Central Bank has issued a number of regulatory amendments, and looks to facilitate encouraging business environment in the financial sector. These measures are expected to strengthen the capacity of Sultanate's banks and enhance its ability of providing liquidity and credit facilities to various projects, thereby promoting economic growth in the country. The Central Bank of Oman is keeping itself up dated with the latest international regulatory developments across the globe and in view of the macroeconomic challenges that lie ahead, while maintaining the safety, and soundness of the banking system.  Accordingly, CBO has devised the following amendments: </p><p style="text-align:justify;">1.     It has been decided to reduce the capital adequacy ratio from 12% to 11%, which shall increase banks' lending capacity and also reflect positively on overall credit growth. This change is expected bring an increase in the volume of additional credit available from RO 5.2 billion to RO 7.8 billion. </p><p style="text-align:justify;">2.     In order to increase the ability of banks to lend, improve liquidity management efficiency in banks and to stimulate the interbank market, it has been decided to expand the deposit base by including Local Banks' deposits, under which the current allowed rate of 87.5% will provide greater liquidity in the market and will enhance overall credit growth. </p><p style="text-align:justify;">3.     As part of its efforts to implement the guidelines of the Basel Committee on Banking Supervision, the Central Bank has decided to remove the regulatory restrictions imposed on the risk weights to claims on sovereign and central banks. </p><p style="text-align:justify;">4.     In order to enable the banks manage their liquidity gaps more efficiently, the Central Bank of Oman has decided to increase the prudential limit for all currencies from (-15%) to (-20%) for 3-6 months buckets and negative (-25%) for 6 to 9 months buckets and 9 to 12 months buckets. This amendment shall grant greater flexibility to banks to utilize credit lines available to them with their foreign and local correspondents at a reasonable cost. </p><p style="text-align:justify;">5.     It was also decided to increase the prudential limit ratio of Credit Exposure to Non-Residents and Placement of Banks Funds Abroad to banks' local net worth from 50% to 75%. This move is expected to grant greater flexibility to banks enabling them to better manage their liquidity surpluses, diversify their revenues and increase their external borrowing capacities to finance local projects of national importance.</p><p style="text-align:justify;">These directives are effective from 1<sup>st</sup> April 2018 as advised in the circulars issued by the Central Bank of Oman to all licensed banks in the Sultanate of Oman.</p><p> </p>0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900075E4FF44B3F64489802BE694C5C6FB70300A9BCF8A0432A87429120A5B0A0EDBFF9