Latest news with #BankingLaw
Observer
6 days ago
- Business
- Observer
Digital banks in Oman get green-light from CBO
MUSCAT, JUNE 3 The Central Bank of Oman (CBO) has issued a regulatory framework for the licensing and supervision of digital banks, marking a major step toward modernising the country's financial sector. The framework, which came into effect on June 1, 2025, is aligned with Oman Vision 2040. The framework allows digital banks to operate as either locally incorporated joint-stock companies (SAOC or SAOG) or as branches of foreign banks, subject to regulatory approval in their home jurisdictions. Two types of licenses will be offered. Category 1 requires a minimum paid-up capital of RO 30 million and allows full operations. Category 2 requires RO 10 million but comes with business limitations, including caps on customer deposits and corporate lending, and a prohibition on proprietary trading. These limits are waived during the first two years of operation. All digital banks must maintain a physical head or registered office in Oman. They may open administrative offices for customer support, but not traditional branches for transactions. Shareholding limits apply: individuals and their affiliates may hold up to 15 percent of voting shares; corporate bodies up to 25 percent; and holding companies up to 35 percent. Cross-ownership in multiple banks is restricted to 15 percent. Applicants must present a detailed five-year business plan covering digital services, target segments, profitability projections, and a financial inclusion strategy. The plan must outline IT architecture, cybersecurity readiness, and disaster recovery procedures. Digital banks are expected to adopt modern technologies such as AI, open banking, blockchain, and cloud computing. Omanisation targets start at 50 percent and rise to 90 percent by Year 5. The CBO mandates the submission of an exit plan alongside the license application. It must define conditions under which the bank would voluntarily cease operations, such as capital or profitability deterioration. The plan should address customer protection, risk triggers, and exit funding without regulatory assistance. Licensed digital banks must comply with the Banking Law 02/2025, National Payment Systems Law 08/2018, and AML Law 30/2016. They are also subject to digital onboarding rules, cybersecurity frameworks, consumer protection regulations, and fraud prevention protocols. The CBO may require independent technical assessments at the applicant's expense. Non-compliance could trigger enforcement measures, including license revocation. The CBO reserves the right to reject incomplete applications or withdraw approvals if information is found to be inaccurate.
Observer
7 days ago
- Business
- Observer
Digital banks get green light in Oman
MUSCAT: The Central Bank of Oman (CBO) has issued a regulatory framework for the licensing and supervision of digital banks, marking a major step toward modernising the country's financial sector. The framework comes into effect on June 1, 2025, and is aligned with Oman Vision 2040. The framework allows digital banks to operate as either locally incorporated joint-stock companies (SAOC or SAOG) or as branches of foreign banks, subject to regulatory approval in their home jurisdictions. Two types of licenses will be offered. Category 1 requires a minimum paid-up capital of OMR 30 million and allows full operations. Category 2 requires OMR 10 million but comes with business limitations, including caps on customer deposits and corporate lending, and a prohibition on proprietary trading. These limits are waived during the first two years of operation. All digital banks must maintain a physical head or registered office in Oman. They may open administrative offices for customer support, but not traditional branches for transactions. Shareholding limits apply: individuals and their affiliates may hold up to 15 percent of voting shares; corporate bodies up to 25 percent; and holding companies up to 35 percent. Cross-ownership in multiple banks is restricted to 15 percent. Applicants must present a detailed five-year business plan covering digital services, target segments, profitability projections, and a financial inclusion strategy. The plan must outline IT architecture, cybersecurity readiness, and disaster recovery procedures. Digital banks are expected to adopt modern technologies such as AI, open banking, blockchain, and cloud computing. Omanisation targets start at 50 percent and rise to 90 percent by Year 5. The CBO mandates the submission of an exit plan alongside the license application. It must define conditions under which the bank would voluntarily cease operations, such as capital or profitability deterioration. The plan should address customer protection, risk triggers, and exit funding without regulatory assistance. Licensed digital banks must comply with the Banking Law 02/2025, National Payment Systems Law 08/2018, and AML Law 30/2016. They are also subject to digital onboarding rules, cybersecurity frameworks, consumer protection regulations, and fraud prevention protocols. The CBO may require independent technical assessments at the applicant's expense. Non-compliance could trigger enforcement measures, including license revocation. The CBO reserves the right to reject incomplete applications or withdraw approvals if information is found to be inaccurate. The new framework is expected to pave the way for digital-first banking models, improve access to finance, and foster innovation in Oman's financial sector.
Arab News
30-03-2025
- Business
- Arab News
Oman's Islamic banking assets surge 17% to $22.3bn in 2024
RIYADH: Islamic banking in Oman continued its rapid expansion in 2024, with total assets reaching 8.6 billion Omani rials ($22.3 billion) by December — marking a 16.6 percent increase from the previous year, official data showed. The segment now accounts for 19.2 percent of Oman's total banking assets, according to data released by the Central Bank of Oman. Financing extended by Islamic financial institutions grew by 14.2 percent to approximately 7 billion rials. Additionally, deposits at Islamic banks and windows jumped 21.3 percent, reaching nearly 6.7 billion rials by the end of December. The steady growth of Oman's Islamic banking sector reflects the rising demand for Shariah-compliant financial services and its expanding contribution to the country's banking industry, CBO added. Oman's banking system comprises both conventional and Islamic banking services. Islamic banking is offered through standalone financial institutions and dedicated windows within conventional banks, which can be local or foreign entities licensed in Oman. In May 2011, the CBO issued preliminary licensing guidelines to introduce Islamic banking in the Sultanate. This framework enabled full-fledged Islamic banks and Islamic windows to operate alongside conventional financial institutions. The initiative was formally established in December 2012 through a Royal Decree that amended the Banking Law, mandating Islamic banks and windows to form their own Shariah supervisory boards. It also authorized the CBO to create a central High Shariah Supervisory Authority. Following these developments, the CBO introduced the Islamic Banking Regulatory Framework in December 2012, alongside regulations governing the Hawala Settlement and Safeguard Account. This initiative aligned with Oman's broader economic strategy, promoting financial inclusion, economic diversification, and responsible financial practices. Since its inception, Islamic banking in Oman has played a key role in advancing the objectives of Oman Vision 2040. 'This sector has played a vital role in augmenting national savings and investment, contributing to the development of a more diversified investment base and availability of wider range of financial products and services for consumers and businesses,' CBO said. In November, Fitch Ratings forecasted continued growth in Oman's Islamic finance sector, driven by increasing consumer demand, expanding distribution networks, greater use of sukuk for public funding, and ongoing regulatory advancements. A key development in October was the CBO's introduction of the Bank Deposit Protection Law, extending deposit protection to Islamic financial institutions — an essential step in bolstering confidence in the sector. The agency added that strong economic conditions, improved asset quality, stable profitability, and solid capitalization position Islamic banks to withstand moderate financial shocks, despite regional geopolitical risks.
Observer
18-03-2025
- Business
- Observer
New Law supports digital banks, Fintech, crowdfunding
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.
Observer
17-03-2025
- Business
- Observer
Oman strengthens banking laws to drive financial innovation
MUSCAT: The Sultanate of Oman has taken a significant step in modernising its financial sector with the issuance of Royal Decree No (2/2025) on the Banking Law and Royal Decree No (3/2025) on the Central Bank of Oman (CBO) System. These legislative changes coincide with the appointment of a new CBO Governor and Board of Directors, reinforcing efforts to enhance the legal and regulatory framework governing the financial system. The reforms aim to ensure the sector remains resilient, adaptable and aligned with international banking developments. Over the past two decades, Oman's banking industry has undergone substantial growth, making it necessary to update its legislative structure to keep pace with digital transformation and emerging financial services. The new Banking Law, comprising 241 articles, is designed to improve regulatory clarity, enhance transparency and foster financial inclusion. It introduces measures to strengthen the governance of the Central Bank of Oman, outlining its responsibilities in implementing monetary policy, managing liquidity and maintaining financial stability. The law also affirms the CBO's exclusive authority over currency issuance, ensuring that national currency regulations align with global financial advancements. One of the major updates in the Banking Law is its focus on attracting foreign investment and expanding banking operations. The revised regulations simplify procedures for foreign banks entering the Omani market while granting financial institutions greater flexibility in investment and credit activities. This includes enhanced support for small and medium-sized enterprises, facilitating access to financing for local businesses and large-scale projects. The law also dedicates a chapter to Islamic banking, introducing provisions that eliminate multiple taxes and fees on real estate and movable assets, making Sharia-compliant finance more attractive. Recognising the rapid evolution of digital finance, the new law paves the way for digital banks, financial technology (fintech) solutions, crowdfunding platforms and open banking applications. By easing regulatory requirements, Oman aims to encourage innovation in banking services while promoting financial inclusion. Additionally, the law reinforces consumer protection, emphasising transparency in service pricing, fairness in banking transactions and stricter safeguards for customer data privacy. The governance framework for the Central Bank of Oman has also been restructured under Royal Decree No (3/2025), which outlines the bank's core objectives through a set of 21 articles. These objectives include ensuring monetary stability, overseeing banking and non-banking financial institutions, enforcing financial regulations and maintaining the overall safety of the financial system. The new framework enhances the CBO's role in supporting Oman's long-term economic development, in line with the nation's broader financial and investment goals. These reforms build on Royal Decree No 47/2024, which introduced the Bank Deposit Protection Law to safeguard depositor funds and bolster confidence in the financial sector. These legislative measures establish a robust, transparent and investor-friendly banking environment, positioning Oman as a stable financial hub in the region while ensuring sustainable economic growth. — ONA
