Thursday, March 28, 2024 | Ramadan 17, 1445 H
broken clouds
weather
OMAN
23°C / 23°C
EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Promoting concept of Islamic Sukuk in Oman

minus
plus

Haider Al Lawati - haiderdawood@hotmail.com - Omani market is currently witnessing the launch of a number of Islamic financial instruments to absorb local liquidity on one hand and promote these tools in Omani society on the other.


Since the onset of Islamic banking in the Sultanate in 2011, operations of Islamic banks and Islamic windows of conventional banks started yielding positive results in the composition of deposits, providing banking facilities to individuals, institutions and financing infrastructure projects, besides offering products and Islamic banking tools, including new Islamic instruments.


Recently, ‘Meethaq’ Islamic Banking — the Islamic window of Bank Muscat — launched the first local Sukuk IPO. It received great response from individuals, investors and other institutions at the local and regional levels.


According to a statement from ‘Meethaq’, the first series of the Sukuk IPO, launched between May 21 and June 1, brought in more than the designated value.


This confirms the great confidence of investors in such financial instruments in the Sultanate which is a pioneer in enhancing Islamic banking and supporting areas of Islamic finance in the Sultanate.


The Islamic Sukuk Program launched recently by Meethaq’ Islamic Banking was approved by CMA, CBO and other stakeholders to launch the first open Sukuk programme for all investors, including individuals, at a value of RO 100 million ($260 million). A total of RO 25 million ($65 million) was offered as a first series with five per cent annual profit rate for five years due in 2022.


This will help change the landscape of Islamic banking in the Sultanate in the upcoming period as well as boost Oman’s banking system, make achievements by providing financing for a number of economic and commercial projects in various fields and offering Shari’ah compliant facilities and services to the Omani community and private sector institutions, which will help Islamic banks to continue their business and marketing operations.


Such projects aim at the development and expansion in providing banking services and facilities compliant with the principles and provisions of Islamic law.


The recent IPO received huge response from all segments of Omani society and abroad. It is a catalyst in the development of more innovative Islamic banking products and the launch of banking services and facilities that benefit clients and at the same time become a source to meet the needs of companies and institutions in financing various projects in all sectors and support companies and businessmen.


Islamic banks and Islamic windows in the Sultanate, including ‘Meethaq’ Islamic Banking, have already signed a number of agreements and MoUs to provide financing facilities to a number of companies and factories in the Sultanate, including government companies such as Oman Air and other companies in the field of manufacturing.


It is no secret that Islamic banks, Islamic windows or Islamic finance companies issue these Sukuk after the establishment of any project that needs financing. These are carried out according to the laws of the country and there is a legitimate supervisory authority to ensure that everything related to Sukuk is in compliance with Islamic principles and laws and decisions of the State.


Today, there are several types of Islamic instruments that work to provide liquidity for entrepreneurs in a short time. These carry lower risk for investors, as they can be sold in case of loss and their system is Sharia-compliant far from Riba-based debt.


Moreover, these Sukuk help the government and large businesses cover possible fiscal deficit, and are useful for use in Western banks and can be traded globally.


Islamic Sukuk will help increase investment opportunities in projects, which plays a positive role in strengthening the state’s economy and boosting its growth quickly and effectively.


Last but not least, they help increase the State’s ability to build economic development plans, create trading markets, increase individual savings and expand investment projects, which provide a bigger opportunity for institutions and individuals in the Sultanate to attract Islamic banks and businesses in the upcoming period.


SHARE ARTICLE
arrow up
home icon