MUSCAT: Oman’s Islamic finance sector has evolved beyond being merely a growing segment of the banking system, with increasing focus now on how effectively it can finance the assets, enterprises and infrastructure underpinning Oman Vision 2040.
That was the key message delivered by Hussain al Lawati, CEO of the Development Bank, during the inaugural Islamic Finance Sustainability & ESG Forum held on May 20 at the Crowne Plaza Hotel, Madinat Al Irfan, Muscat.
Al Lawati participated in Panel 1 titled, 'The Way Forward: The Role of Islamic Banking & Finance for Sustainable, ESG Finance Under Oman Vision 2040.'
Highlighting the sector’s progress, Al Lawati noted that Islamic finance in Oman has transformed from a late entrant into a substantial component of the Sultanate’s banking system. By the end of November 2025, Islamic banks and banking windows held assets worth approximately RO 9.3 billion ($24 billion), accounting for 19.4 per cent of total banking assets. Islamic financing stood at RO 7.5 billion ($19.4 billion), representing 22 per cent of Oman’s total banking credit and financing.
“The discussion around sustainable Islamic finance can often become too focused on frameworks and reporting,” said Al Lawati. “Those have their place, but the real test is what the finance does. Does it help a manufacturer buy better equipment? Does it reduce industrial waste? Does it support an asset that creates long-term value for Oman? That is where Islamic finance has a natural advantage because it stays close to the asset, the activity and the purpose of financing.”
The forum came at a time when sustainable Islamic finance continues to gain traction globally.
Global sustainable sukuk issuance reached $21.5 billion in 2025, marking a 38 per cent increase from the previous year, reflecting stronger investor appetite for Shariah-compliant instruments aligned with sustainability goals.
Al Lawati stressed that the challenge lies not only in the availability of finance but also in the quality of projects entering the market.
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