Islamic banking in Oman | Oman Observer

THE banking industry in the Sultanate is set to receive a facelift with the launch of Islamic banking. The Central Bank of Oman has already given its nod to conventional banks to operate their Islamic banking business through a ‘window’ operation. As a result, the market can see a number of conventional banks entering the Islamic finance space and capturing a major chunk of the banking assets in the coming years.
The Islamic banking window operation is accepted as a successful model in many markets. In Saudi Arabia, Islamic windows account for nearly half of the Shari’a assets and in the UAE they have an 11 per cent share. According to the latest figures, net foreign assets of the banking system (including CBO) increased marginally by 0.1 per cent to RO 5,045.3 million in May 2011 from RO 5,041.9 million in May 2010, while domestic assets increased by 26.2 per cent.
“The uptake of Islamic finance even in non-Muslim countries has shown that it is not simply a faith-based choice, but also a viable and ethical financial model. If Islamic financial institutions in Oman chart their own course, stay away from products of ill repute such as Tawarruq (cash-for-cash products), they could grow to become serious contenders in the regional Islamic finance industry. Growth figures could match that of institutions around the world as funds that were invested in ethical institutions overseas will be repatriated,” according to Dr Mabid al Jarhi, Head of Training at Emirates Islamic Bank, President of the International Association for Islamic Economics and Member of the Shari’a Board on the Dubai Financial Market.

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