The Central Bank of Oman (CBO) has announced that it is developing a strategy to align the robust growth of the Islamic banking sector with the country’s national growth objectives.

CBO Executive President Tahir Salim al Amri (pictured) said the strategy will help contribute to, among other objectives, foreign investment inflows and collaborative partnerships with international players, while also sustaining the growth of the Islamic banking sector in the Sultanate of Oman.

Delivering the keynote address at the opening of the IFN Oman Forum 2021 on Tuesday, he said: “I believe that outlining the strategic direction of the Islamic banking industry will promote the healthy and balanced growth of the sector, attract foreign investors, and ease the path for collaboration between international and regional partners, Islamic finance standard setters and multilateral organisations for training, awareness building and transfer of knowledge.”

The new roadmap will help provide new impetus to the growth of an industry that has continued to thrive notwithstanding the global economic downturn and the pandemic, said the Executive President.

“Despite unprecedented macroeconomic developments and Covid-induced challenges, Oman’s Islamic banking sector demonstrated a robust and consistent performance,” Al Amri noted.

“During 2021, Islamic banking sector assets reached RO 5.7 billion as of June 30, 2021, with a market share of 15.13 per cent. Similarly, the market shares of Islamic banking in gross financing and total deposits reached 16.9 per cent and 16.8 per cent respectively by the same date. This robust growth has been backed by high asset quality with a low non-performing financial ratio of less than 2 per cent. This remarkable growth in the Islamic banking sector in Oman has led it to become the 15th largest Islamic banking market at the international level.”

Given this pace of growth, coupled with its rising market share, Islamic banking and finance are well-placed to make a greater contribution to the achievement of the country’s strategic national objectives, said Al Amri.

“The CBO is aiming for Islamic finance to be the key contributor to the national development agenda to foster technology adoption, financial deepening and inclusion in the Sultanate,” he affirmed.

The strategy will also incorporate feedback gleaned from Islamic banking entities and other industry stakeholders, covering legal and regulatory issues, awareness building and talent development initiatives required in the market.

The recommendations, further supported by expert studies and benchmark assessments, broadly looked at three key issues:

(i) a legal framework for Islamic banking (ii) a sharia governance framework, and (iii) implementation of international standards such as of the prudential standards issue by the Basel committee on banking supervision and IFSB accounting and auditing standards by IFRS and AAOIFI, and to conduct product documentation standards.

Earlier, Al Amri noted that Islamic banking entities (IBEs) had continued to expand their operations in various governorates and regions of the Sultanate of Oman. IBEs have already established 94 branches with some more under process, in addition to onsite banking facilities, mobile banking units, 150 ATM/CDMs, and online and mobile banking platforms. The sector is expanding its outreach and widely offering its services to individuals, businesses and public sector customers.”

IFN Oman 2021, held under the auspices of the Capital Market Authority (CMA), was organised by RedMoney Events.

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