Oman — a pioneer in regional Islamic finance

The Sultanate of Oman is a pioneer in the field of local and regional Islamic finance, this according to a report of Redmoney — a Malaysian institution specialising in Islamic financial services.

According to its website, the Islamic finance services in the Sultanate of Oman cover all sectors and products, and it continues to thrive. With a strict regulatory infrastructure in place, industry players are reassured of support from the Omani government, and the market remains open for expansion and improvement.

The total assets of Islamic banks and windows increased by 9.6 per cent on a Y-o-Y basis to RO 6.2 billion and constituted about 15.9 per cent of the banking system’s assets at end- June 2022, the Central Bank of Oman said in its recently published Review of Banking and Monetary Developments. Islamic banking entities provided financing of RO 5.1 billion at the end of June 2022, recording a growth of 11.2 per cent over that a year ago. Total deposits held with Islamic banks and windows increased by 12.8 per cent to RO 4.7 billion.

Redmoney noted that although the Sultanate of Oman in relatively new in Islamic finance and banking compared to other GCC countries, it now has total Islamic assets of RO 5.9 billion, which represents 15.2 per cent of the country’s total banking sector assets.

Earlier this month, CBO reported that the Islamic banking sector in the Sultanate of Oman, which comprises of two Islamic banks and five Islamic banking windows, has continued its double-digit growth in 2021 despite the adverse economic impact of the Covid-19 pandemic.

The apex bank noted in its Financial Stability Report 2021 that the total asset base of Islamic banking sector in Oman reached RO 5.9 billion (versus RO 5.2 billion in 2020) with a growth of 13.6 per cent. This “corresponds to market share of 15.2 per cent of total banking sector assets, thereby gaining systemic significance as a sector,” the Central Bank stated.

Similarly, as of December 2021, total deposits and total financing of the Islamic banking sector reached RO 4.4 billion and 4.9 billion respectively, with a corresponding share of 17.2 per cent and 17.4 per cent, the report noted.