The board of governors of the Central Bank of Oman (CBO) has revised the legal framework of the sultanate's banking system for the implementation of Islamic banking activities in the country.
According to a statement issued on Saturday, the board decided to introduce amendments to the existing banking law in relation to Islamic banking.
A Royal Decree issued last week amended provisions of the banking law to allow for the inclusion of Islamic banking as a licensed banking activity through either specialised banks or independent windows at existing commercial banks.
The CBO had circulated a draft of the Islamic banking regulations to banks, which expect final guidelines to be issued very soon.
Speaking to Muscat Daily, Dr Jamil el Jaroudi, CEO of Bank Nizwa, said that his bank is aiming to launch operations by the end of this year or early next year.
He said, “The bank is in a state of full readiness, having successfully trained its staff and tested its systems. We hope to launch our services as soon as we receive the final licence from CBO and we connect our systems live to CBO systems.”
“We are looking forward to the official issuing of these regulations as they will mark a new era of banking in the sultanate. We will be the first full-fledged Islamic bank in the country,” added Jaroudi.
Oman's existing banking law includes 120 articles divided over five chapters. The new amendment has added six new articles in the new sixth chapter titled 'Islamic Banking Transactions.'
The new articles include general terms relating to the legal framework for Islamic banking activities, control, supervision. And the CBO board will have the jurisdiction to develop rules and regulations for the sector.
The new articles also stipulate that Islamic banking transactions should not be in violation of the tenets of Islamic Sharia and exempt banks running Islamic banking businesses from fees on movable real estate assets due to the special nature of their transactions.
The CBO is to also issue an executive bylaw for Islamic banking under article No 122 of the banking law.