MUSCAT, JULY 18 – The total assets of Islamic banks and windows combined in the Sultanate amounted to RO 3.1 billion at the end of 2016, accounting for a growing 10.3 per cent share of total banking system assets, according to the Central Bank of Oman (CBO)
Sharia-compliant banking has burgeoned since it was introduced in December 2012. By the end of 2016, there were also two full-fledged locally incorporated Islamic banks, namely, Bank Nizwa and Al Izz Islamic Bank. Along with Islamic Windows owned by conventional banks, they together operated with 70 branches at the end of 2016, up from 60 a year ago. Between them, they also operated 72 ATMs and 17 cash deposit machines.
Islamic banking entities provided financing amounting to RO 2.42 billion at the end of December 2016, a rise of 36.2 per cent over the previous year’s outstanding of RO 1.78 billion. Total deposits held with Islamic banks and windows also registered a significant increase of 41 per cent to RO 2.17 billion at the end of 2016 from RO 1.54 billion a year ago. Core capital and reserves stood at RO 433 million at the end of 2016, a rise of 10.7 per cent over the previous year end.
“An important turning point in the banking sector in Oman was the introduction of Islamic banking since December 2012,” the apex bank said. “Currently, two full-fledged Islamic banks and six local conventional banks with separate dedicated Windows have been established for practicing and offering Islamic banking products. All these institutions have their own Sharia Supervisory Boards to guide them in Sharia-related matters,” the bank stated in its newly published 2016 Annual Reporter.
Further, as part of strengthening the regulatory framework, a High Sharia Supervisory Board was established in CBO with eminent scholars. The functions of the Board include giving opinion and advice to CBO on Sharia matters and deciding on issues which are subject of dispute between Sharia Supervisory Boards in licensed banks.
“CBO regularly interacts with the Islamic Financial Services Board (IFSB), an international standards setting organisation for the Islamic banking industry. It is widely acknowledged that the prudential standards and guiding principles of IFSB enhances the soundness and stability of the Islamic financial services industry. This is particularly relevant as the market share of Islamic banking is increasing in Oman,” it further stated.