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No plan to allow foreign Islamic banks for time being, says CBO

H E Hamood Sangour al Zadjali (second right) and other central bankers from the region at a panel discussion.

Muscat - 

Central Bank of Oman (CBO) does not plan to allow foreign Islamic banks to set up operations in the sultanate for the time being as it assess the market size and demand for the next two to three years.

Speaking to reporters on the sidelines of the Oman Second Islamic Banking and Finance Conference at the Al Bustan Palace Hotel on Sunday, H E Hamood Sangour al Zadjali, executive president of CBO, said, "Foreign banks have shown some interest in setting up Islamic banking operations in the sultanate, but we will first give opportunity to local banks and see how the market develops. Accordingly, we will decide whether we need to expand the number of Islamic banking units or not."

"We cannot judge the market now as Islamic banking has just been launched. We need about two to three years to see how the market settles down and after that we may consider whether to add more banks or not. I think for the time being two Islamic banks and six Islamic banking windows should be enough for the market," said H E Zadjali. He said that in due course the government will start issuing sukuk.

"We are in discussions with the Ministry of Finance on issuing sukuk for Islamic banks and other investors. We do not have any timetable or plans on the sukuk size as of now, but we hope that some time towards the end of this year or the next there will be some government sukuk issues."

As per the 2013 budget, the government plans to raise RO200mn by issuing bonds. ÒProbably some of these government bonds will be sukuk if the government be able to finalise it. The sukuk issue is different from the normal bond issue and has to be asset-based. These assets are projects, so the government has to choose the projects upon which the sukuk will be based,Ó added H E Zadjali.

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