Diversification of Islamic Financial Insturments
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measure that is helping an extremely young Islamic financial market of Oman, to enjoy a
healthy global status in Islamic finance development. This could be achieved by breaking down
the progress of each sub sector of the Islamic financial setup in the Sultanate and highlight the
developments. Currently, the main sub sectors are, the Islamic banking sector, Capital Markets
vis-à-vis Sukuk and the Takaful industry in Oman. The following section two starts by
discussing the Islamic banking progress in Oman. Section three will highlight Oman’s
initiatives with regards to Islamic capital market instruments in from of Sukuk and regulation
for the same. Section four dwells on Takaful industry in Oman followed by section five which
gives cohesive coverage to the operational, policy and country constraints that need to be
addressed for diversifying the product range, reach and appeal of Islamic finance. Section six
provides policy recommendations.
3.7.2 ISLAMIC BANKING IN OMAN
The Royal decree number 69/2012 paved the way for dual banking system in Oman by
amending the Banking Law No. 114/2000. This allowed for both conventional and Shariah
compliant products. Currently, there are two full fledge Islamic banks and six windows
operating in the Sultanate.
Table 56: Islamic Banking Institutions in Oman
Name of institution Islamic Brand Market Share (Deposits)
Bank Nizwa Full – fledge Islamic Bank 16%
Alizz Bank Full – fledge Islamic Bank 11%
Bank Muscat Meethaq 33%
Oman Arab Bank Al Yusr 3%
Bank Dhofar Maisarah 12%
Bank Sohar Sohar Islamic 4%
National Bank of Oman Muzn 7%
Ahli Bank Al Hilal 14%
According to Shaukat and Hamdan (2017), recent estimates predict the Islamic banking sector
to take a 10-12 percent share of the market over the next three years. Already the markets has
touched 10.2% share95.
Islamic Banking is experiencing steady growth both on the asset /financing side and the
deposits side. The figures below highlight the growth trend.
95 See also the latest speech of the Executive President of Central Bank of Oman on Islamic Banking in Oman, delivered at the
4th AAOIFI Annual Meeting of Board of Ethics and Governance, 2017, Muscat, Oman.