» Advantages of Islamic Banking Sector in Oman

Despite the challenges facing the Islamic banking industry in general and in Oman specifically, reports indicate ‘’the Islamic banking sector in Oman is promising, as results suggest more growth, stability and a decrease in challenges’’.

The advantages of the Omani sector are:
1- The existence of a central Shari'a control body gets rid of some problems facing Islamic banks, especially the differences in Fatwa, as well as the pressures the shari’a body of the Islamic banks may face from the board of directors. Some researchers think this may affect the public trust in the Islamic banks’ transactions.

2- The efforts of the Omani Central Bank to guarantee the achievement of the plans and goals of Islamic banks by enacting laws and regulations to organize the work of the sector, thus raising its performance and increasing its capabilities as one of the most promising economic sectors in the development plan.

3- Oman seeks to decrease the dependence on oil by making the non-oil revenues increase to 28% in 2020 compared to 15% in 2014. Islamic financing in Oman, with excess liquidity, is able to contribute to supporting the national economy, thus it will enhance its position and increase the opportunities to develop. 

4- The competition between the two Islamic banks and the traditional ones, which Oman allows to open Islamic windows unlike some other countries. This competition is a healthy phenomenon, pushing these banks to further innovations and providing more developed services to attract new clients.

5- The enactment of a special law for the Islamic banks exempting their transactions from fees, thus enhancing their ability to achieve higher returns and giving them a competitive edge. It is known by the researchers and specialists of the Islamic banking field that the biggest challenge facing Islamic banks is the absence of a special legislative committee to organize their work.

6- The Central Bank has tasked the Higher Committee of Financial Stability to study the systematic risks on the banking works and Capital Market, providing suitable solutions to manage these financial risks and crises, coordinating the monetary policy and precautionary control, as well as reducing the risks that may face the Islamic banks to eliminate what might be the reason clients stop depositing their money in the Islamic banks. This is a serious action from the Omani Central Bank to help the Islamic banks to overcome their challenges.