Oman's market regulators should develop a vibrant sukuk market for helping the proposed Islamic banks to invest their funds and the government to raise debt funds for infrastructure projects, said an Islamic banking expert here.
When the Islamic banks start operations, the deposit growth (or growth on the liability side) will be much higher than the anticipated growth in asset side and the Sharia-compliant banks will find it extremely difficult to invest their deposits, if there is a lack of Islamic debt instruments like sukuks in the financial system.
"In the initial years, the deposit growth will be phenomenal and a lot of money will come to Islamic banks, and they will be burdened with the challenge as to where to invest that fund. The availability of products where the banks will be able to invest immediately is rather limited.
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