DUBAI- Oman's central bank announced on Tuesday its biggest package of regulatory reforms for commercial banks in years, relaxing capital and credit exposure rules in an effort to boost economic growth.

In the stock market, which hit a nine-year low this week, shares of the largest banks rose in response, with National Bank of Oman adding 3.8 percent.

Oman's economy and markets have been pressured by low oil prices and rising U.S. interest rates, so authorities are keen to keep banks liquid and to encourage them to lend.

Oman was the only one of the Gulf's six wealthy oil exporters where banks' operating profits shrank last year, Boston Consulting Group found; annual growth in conventional banks' lending fell to 3 percent late last year, the slowest in 12 years.

The package seeks to change this by giving banks more flexibility to lend to companies and each other and to borrow from abroad, and by stimulating activity in an undeveloped interbank money market.

The minimum capital adequacy ratio, the proportion of capital that banks must hold back from lending, was reduced to 11 percent from 12 percent. That should increase additional credit available to 7.8 billion rials ($20.3 billion) from 5.2 billion rials, the central bank said.

This may do little to boost lending immediately; Oman's Ubhar Capital noted actual adequacy ratios of all eight listed commercial banks were already several percentage points above the floor.

But it said that including other regulatory demands on banks' capital, the move would ease future pressure on banks at the lower end of the spectrum to raise additional capital.

LIQUIDITY

Other steps aimed to encourage banks to exchange their excess funds with each other, and therefore use available liquidity in the economy more efficiently, rather than sitting on the money.

Banks can count deposits obtained from other local banks towards their own deposit bases; this should give them more room to lend while obeying a regulatory requirement to limit credit they extend to 87.5 percent of deposit bases.

The central bank removed restrictions on how risks related to claims on governments and central banks are weighted in banks' portfolios. Ubhar Capital said this would lift banks' calculations of their capital adequacy ratios.

Prudential limits for banks' exposure in all currencies for various short-term maturities were increased, in order to let banks manage their liquidity gaps more efficiently -- a step which could help to bring down interbank lending rates.

"This would give banks more flexibility to utilise credit lines available to them with their foreign and local correspondents at a reasonable cost," the central bank said.

The ceiling for banks' credit exposure to non-residents and placement of their funds abroad was raised to 75 percent of their local net worth from 50 percent to help them better finance "local projects of national importance".

In another move to ease lending conditions, announced last week, the central bank allowed commercial banks to factor in their local interbank money market positions when calculating deposit bases.

(Reporting by Andrew Torchia; editing by John Stonestreet and Gareth Jones) ((andrew.torchia@thomsonreuters.com; +9715 6681 7277; Reuters Messaging: andrew.torchia.thomsonreuters.com@reuters.net))