Muscat: The financial and banking system in the Sultanate of Oman kicked off the year with the issuance of Royal Decree No. 2/2025, concurrently with the Royal Decrees on the formation of a new Board of Directors for CBO and the appointment of its Governor, in a step aimed at enhancing the legal and regulatory framework to ensure efficient response to the requirements of the modern financial system.
The banking sector in the Sultanate of Oman has witnessed significant development over the past two decades, which prompted a comprehensive review of the legislative framework to keep pace with the rapid transformations in the Banking and financial businesses to benefit from the advancements made in digital innovation and technology in offering banking and financial services.
These developments are reflected in the new Banking Law.
Banking operations and CBO are regulated by two legislations:
The first is related to the regulation and governance of CBOs as a unit of the State's Administrative Apparatus, while the second regulates banking business and non-banking financial activities.
The new Banking Law comprises (241) Articles, drafted according to the latest legislative methods and techniques that rely on clarity in legal language, enabling specialists and the public to understand and apply the texts. Moreover, consideration was taken on the clear and sequential breakdown of the Law. Chapter One includes definitions and general provisions, while Chapter Two is concerned with regulating CBO, addressing its responsibilities, finances, and work mechanisms, including implementation of monetary policy and liquidity management. Chapter Three focuses on regulating the issuance of the national currency by the CBO only, to ensure consistency of procedures with global developments and allow the CBO to update the currency's forms and techniques.
The new Law also comprises provisions for attracting local and foreign investments in the banking sector, by allowing foreign banks to operate in the Sultanate of Oman while enhancing the flexibility of investment and credit activities of licensed banks, serving as a legislative basis for banks to support small and medium-sized enterprises (SMEs) and provide funding to businesses and projects.
Moreover, a whole chapter has been dedicated to regulating Islamic banking, by enacting provisions to enhance its attractiveness, such as avoidance of double taxation on real estate and movable property when the related transactions are carried out in exact accordance with the principles of Islamic banking.
The Banking Law introduces new ways of doing banking and financial business, such as digital banks and financial technology (Fintech), paving the way for the launch of digital crowdfunding platforms, open banking applications, and other technology-based financial services enshrining relaxations on the regulatory requirements, whilst to encourage these activities and support financial inclusion.
The law also highlights the importance of protecting the rights of customers and consumers utilizing financial services in the banking sector and other financial institutions, by enhancing the principles of transparency, fairness, and disclosure of services and prices, in addition to data protection and privacy.
As for CBO's Statute, issued under Royal Decree No. (3/2025), it comprises (21) Articles that operate as the Central Bank Act for regulating the operations and governance of CBO. These Articles define CBO's objectives of achieving monetary stability, contributing to financial stability, and ensuring the safety of banks and financial institutions, in addition to enhancing its role in achieving the Sultanate of Oman's vision for sustainable economic development.
In addition, the Articles of the Banking Law clearly define the functions of CBO, such as issuing the national currency and maintaining its value, setting and implementing monetary policies, and supervising licensed financial and banking activities.
It is noteworthy that the issuance of these legislations was preceded by the issuance of the Bank Deposits Protection Law under Royal Decree No. (47/2024), which reflects the completion of the legislative framework that regulates CBO operations and the banking sector, and establishes a legal framework that enhances the position of the Sultanate of Oman as a stable financial hub that attracts investments.
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