Diversification of Islamic Financial Instruments
136
3.7 CASE STUDY: OMAN
3.7.1 INTRODUCTION
Oman had a population of 4.0 million (2016) and a GDP of USD 66.2 billion93 presents an
interesting case study of an OIC member country with a fairly recent introduction to Islamic
finance.
Oman’s welcome adoption of Islamic banking and finance has created a valuable opportunity
to reap desired economic benefits of risk sharing financing; potentially setting trends by
resorting to innovative approaches to implement and promote the authentic Islamic finance.
Although the Sultanate is GCC’s last mover in the discipline, it thus far appears to have worked
the last mover status into a last mover advantage. It is apparent that Islamic finance is
ascending to greater prominence in the Omani financial system. This can be supported by the
noticeable measures the country took to implement Islamic finance. The following gives a list
of some robust institutional measures.
 Among the most prominent is Oman’s Islamic Banking Regulatory Framework (IBRF)
(IFN, 2015), a detailed and comprehensive document covering all aspects of Islamic
banking. The framework has been well received in the international fora and is
considered among the most stringent to govern Shariah compliant financing.
 The launch of the maiden Shariah index, to be known as the Muscat Security Markets
Shariah Index. The index currently comprises of 31 listings with a market
capitalization of around $30bn v/s a $72bn GDP (Shaukat, 2015).
 The Sultanate’s adoption of AAOIFI, Accounting and Auditing Organization for Islamic
Financial Institutions, accounting standards.
 In the area of governance and supervision, Oman’s formalization of a Centralised
Shariah Board as well as the mandatory practice of external Shariah audit
 The Sultanate issuance of its maiden Sovereign Sukuk and the Capital Market
Authority’s latest issuance of a separate legal and regulatory framework for the same;
supporting further the plans of a second Sovereign Sukuk.
 Moreover, the Central Bank’s College of Banking and Financial Studies, development of
a dedicated unit for Islamic finance training, education, research, consultancy and
capacity building as well as the initiative by Central Bank to soon institute a proper
scheme of Islamic Deposit Insurance(Takaful).
It is on the basis of these solid measures that have led the latest Islamic Financial Development
Index report (2015/16) to rank Oman as number 4 among the top performers, behind
Malaysia, Bahrain and UAE94. Consequently, it becomes pertinent to express in details all given
93 Focus Economics indications, retrieved July 2017. See
94 See Shaukat, M and Hamdan Al-Raisi, A (2017). “Risk Sharing Equity-Based Islamic Finance, Macroeconomic Resilience and
Significance to Oman as a New Entrant”. The Journal of Finance, Accounting and Management, USA, Jan, 2017. Also see Shaukat,
M (2017a).