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Year 2013


CBFS Celebrates 30 Glorious Years of Academic Excellence  (24/12/2013)

The College of Banking and Financial Studies (CBFS) celebrated its 30th anniversary at a glittering ceremony held on Tuesday December 24th 2013 at its campus in Bousher.

The event which was held under the kind patronage of His Excellency Dr. Fuad bin Jaafar Al-Sajwani, Minister of Agriculture and Fisheries, saw participation of eminent government and banking personalities including H.E. The Executive President of Central Bank of Oman.

The ceremonial celebrations began with recitals from the Holy Quran, followed by the recitation of a poem in the honor of the college by Mr. Ahmad Al-Braiki, an eminent poet.

Delivering the opening address, Mr. Ali bin Hamdan Al-Raisi, VPERSD, GCC and IFO Domain, who is also the Chairman of CBFS Board of Directors, congratulated everyone associated with CBFS for their outstanding contribution in 30 years of academic excellence at the institution.

Dr. Ahmed Mohsin Al-Ghassani, Dean, College of Banking and Financial Studies, who also spoke on the occasion outlined the role of institution detailing its major achievements and milestones in its 30 long years of glorious existence.

Later on a detailed presentation showcasing stage-wise development of the organization was made which depicted how the organization grew into an institute of academic excellence receiving some of the prestigious recognitions and coveted awards in the last 30 years.

Speaking on the occasion, Mr. Suleiman bin Hamad Al-Harthi, General Manager of Banking Operations at Bank Muscat "Meethaq", expressed his happiness for being a pass-out of the CBFS. Mr. Al Harthi who was an alumnus of the institute's first batch, said he was honored to be a part of this celebration since he was one of the first and foremost students of the institution.

Marking the culmination of the program, His Excellency Dr. Fuad bin Jaafar Al-Sajwani presented mementos honoring people and organizations for their role and contribution towards the development and growth of CBFS.

Some of the recipients included: the Central Bank of Oman, former Chairmen of the Board of Directors and Deans, the college's first batch of alumni, partners who contributed to the CBFS' pioneering role in the academic field, a group of retired CBFS employees, and other senior staff members from the College who completed 15 years of service at the organization.

CBO's Board of Governors Issues Decisions relating To the Banking Sector  (23/12/2013)

The Central Bank of Oman's Board of Governors held its 164th meeting on Monday, December 23rd, 2013 under the chair of Dr. Ali bin Mohammed bin Moosa, Deputy Chairman of the Board.

In the meeting, the Board reviewed various issues concerning the banking sector, and took appropriate decisions. The Board decided not to separate the investment activities and the banking activities and establish affiliated companies for this purpose by Commercial Banks. It decided to continue with the existing system.

Owing to the saturation of domestic market, the board decided not to issue any fresh licenses to any new Money Exchange Companies and announced a moratorium on the same for the next two years until the end of 2015.

Other issues which came up for discussions at the meeting included the decision to increase the Central Bank of Oman's Capital from RO 500 Million to RO 700 Million with effect from 1st April 2014. The Board also approved, in principle, the National Payment System Law.

In addition to examining the Economic and Financial Report as of 30th September 2013, the Board of Governors also endorsed and approved CBO's Annual Budget, the Pension Fund and the BDIS' annual budget for 2014.

Additionally, the Board also examined CBO's financial position as at the end of November 2013 and the performance of its external investments during the period under review. The Activity Report of all the CBO departments was also reviewed during the meeting.

The Board also deliberated the recommendations included in the report of the mission of International Monetary Fund & World Bank on Financial Sector Assessment Program (FSAP) and directed CBO's executive management to follow-up with the implementation of the said recommendations as soon as possible.


CBO Issues Commemorative Silver Coin to Celebrate 43rd National Day (02/12/2013)

In celebration of the 43rd National Day of the Sultanate, the Central Bank of Oman has issued a silver commemorative coin which bears a resemblance to the Umayyad Dirham Minted way back in Oman in 81 H.

According to a press release issued here on Tuesday December 3rd 2013, the resemblance to the Umayyad Dirham at the center on the reverse side of the new commemorative coin was to commemorate its historical significance as a value addition to the Omani civilization.

The release further stated that the coin weighing about 28.28 gms, in denomination of R.O 1 can be purchased from Central Bank of Oman at a price of R.O. 18. For further details and full specifications, please click here.


44th Issue of GDB Evokes Huge Response (20/11/2013)

The Central Bank of Oman's 44th issue of government development bonds worth OMR 100 million received a remarkable response from both, domestic institutional as well as individual investors.

The new bond, which was auctioned on November 19th 2013, was oversubscribed by OMR 74.38 million and received bids worth OMR174.38 million, as against the Issue announced amount of OMR 100 million.

As per the data released by MOD, the total value of subscription applications – received under competitive bidding process only - for the 44th issue of the Government Bonds amounted to OMR 174.38million.

The amount received in excess of the stipulated issue was paid back to the concerned parties and only a total of RO 100 million were allotted in government bonds.

A large number of commercial banks, specialized banks, financial companies, pension funds and insurance companies operating in the Sultanate applied for the 44th Issue.

As per the sector wise allotments, the commercial banks got the major share of the allotments. The banks which bid for the highest number of bonds, applied for issues worth OMR 90.96 Million, out of which they received allotments worth OMR 51.23 Million.

The average yield equivalent percent to the accepted price in the 44th Issue was 2.05 percent at price of OMR 104.495. While the highest yield equivalent was at 2.25 percent for OMR 103.530, the lowest was at 1.81 percent to an accepted price of OMR 105.665.

Royal Orders of His Majesty: CBO Warns of any Increase in the Credit Ceiling of Civil Service Staff (18/11/2013)

The Central Bank of Oman has issued a warning in a circular to all the licenced banks operating in the Sultanate to strictly abide by the Royal Orders of His Majesty Sultan Qaboos bin Said regarding the standardization of grades and salaries of the staff of the civil sector, including its all units, bodies and institutions.

The Central Bank in its circular indicated that in line with item 6 of the Royal Orders, which refers to the need to monitor banks to safeguard against any increase in the personal loans ceiling limits, the Central Bank has cautioned all banks against any abuse or exploitation of the resultant increase in the salaries of the intended recipients.

The circular further indicated that any abusive action might prejudice the interests of the civil sector staff and with scope for inflation or adverse impact on the economy.

The Central bank reiterated that banks should adhere to the Royal Orders and should not raise the personal loan ceiling limits or loan interest rates of the beneficiaries or take any other measure with scope of similar effect.

It also pointed out that it will be in order for banks to take increased repayment installments on existing loans if and only the borrowers themselves choose so, based upon increased salary/benefits even if they are within 50% and 60% debt service ceiling limits for personal loans and housing loans.

The Central bank reminded all the banks that it will be monitoring them closely in this connection and shall take strict action under the Banking Law and all the instructions thereunder.

Tender Announcement: CBO Invites Bids for Insurance of its Properties & Assets  (31/10/2013)

CBO is inviting sealed bids from eligible insurance companies to provide insurance for CBO properties and assets - property all risks, money on premises, money in transit, fidelity guarantee, public liability, motor fleet, computers, group travel and open marine - for the year Feb 1st 2014 – 31st January 2015.

The tender documents can be obtained from CBO during its office hours on November 6th and 7th 2013. The deadline for submitting the sealed tender bids is December 1st 2013.

For further details, please click the below links:

1. English Version

2. Arabic Version

44th GDB Issue Worth OMR 100 Million Announced  (30/10/2013)

The Central Bank of Oman has announced a new Government Development Bonds issue worth OMR 100 million with a maturity period of five years. The current issue will carry a coupon rate of 3 per cent per annum.

According to a CBO media release the issue will be open for subscription between November 10th and November18th 2013, while the auction will take place on Tuesday, November 19th, 2013. The issue settlement date will be on November 25th, 2018 the release said.

Further details indicated that the interest on the new bonds will be paid biannually on May 25th and November 25th every year until the maturity date which falls on November 25th, 2018.

While the investors are required to apply for these bonds only through the competitive bidding process, they should submit their bids through the licensed banks operating in the Sultanate.

However, investors with applications of OMR1 million and above can directly submit their bids to CBO after getting them endorsed from their respective banks, the CBO statement advised.

The bonds which are direct and unconditional obligations of the Government of Oman can be used as a collateral security to obtain loans from any local licensed bank and can also be traded at prevailing market rates through the Muscat Securities Market (MSM).

The details of the bonds allotted will be recorded in the register maintained by the Muscat Clearing & Depositary Company. Prospectus and application forms can be obtained from any licensed bank operating in the Sultanate.

The issue is open to all investors of any nationality residing in the Sultanate only and those who are residing outside the country are not eligible to subscribe. It may be noted that the previous GDB issue (43rd) which opened for subscription in August 25th and September 2nd, 2013 was also worth OMR 100 million, but had a maturity period of four years, as against the maturity period of five years in the current issue. The 43rd issue carried a coupon rate of 2.75 percent per annum.

However, the 42nd Issue of GDB which opened for subscription between April 28th and May 6th 2013 was worth OMR 80 million and had a maturity period of seven years. It carried a coupon rate of 4.25 percent per annum.

CBO Invites Bids for Maintenance of its Integrated Security Management Systems  (28/10/2013)

CBO is inviting sealed bids from eligible local and international companies to provide Annual Maintenance and Service Level Agreement for its Integrated Security Management Systems at its Head office, Sohar and the Salalah branches. The Specialized local Security companies are required to be of grade one and above.

Interested companies may download the selection criterion/questionnaire and submit the same (the completed questionnaire) on or before 4th Nov 2013.

For further details and for downloading the questionnaire and the selection criteria please click the links below:

1. Full details
2. Pre-Qualification Criteria

CBO Signs Contract for ISO Certification of Currency Department  (06/10/2013)

The Central Bank of Oman has entered into a business contract with M/S Al Jadara Business Consultants to provide consultancy services for implementing ISO 9001:2008 certification processes for its Currency Management Services at the organization.

On behalf of CBO, Dr. Hussain Mohsin, Senior Manager, SPOD and O/I- Quality Improvement Domain (QID), and Ms. Mayyasa Al Balushi, In-charge QID, signed the contract on Sunday, October 6th 2013 amidst the presence of QID officials and representatives from the Consultancy firm.

H.E. The Executive President, Hamood Sangour Al Zadjali, who earlier granted approval to the Project, said that the Certification, once obtained, besides enhancing the brand image of the CBO will also enable the Currency Department to become more customer-focused by adopting the systems and processes in line with International quality standards.

Speaking on the occasion Ms. Mayyasa said that the proposal to implement ISO 9001:2008 Certification for Currency Management Services was initiated by QID as one of the strategic quality initiatives for enhancing the quality of the services delivered by our Bank to the external stakeholders.

Commenting on why the Currency department was chosen as the first one to receive ISO Certification, Ms. Mayyasa said: "the Currency department plays a very significant role in issuing currency notes and in delivery of other such services to the Banks, which are one of the key external stakeholders for CBO."

She added that the ISO 9001:2008 Project initiative would inspire employees to develop customer focus, learn quality practices and adopt the same in their work.

The Project which essentially involves three components, namely, Documentation, Training and Internal Quality Audit in conformity with ISO 9001:2008 standard is proposed to cover the Currency Department at the Head office and its two branches, at Sohar and Salalah for certification.

"Once ready for certification, the Bank would engage a leading certifying body for formal certification," Ms. Mayyasa said.

"We are hopeful that the Currency Department will be ISO 9001:2008 certified sometime during the second half of next year," Ms. Mayyasa said, adding that based on the current experience, QID would scale up the intervention by bringing in more processes and departments under ISO 9001:2008 standards in order to promote quality culture across the Bank at par with International standards.

Interest Ceiling on Personal and House Loans Reduced  (02/10/2013)

The Central Bank of Oman has reduced the interest rate ceiling on personal loans and housing loans by 1 percentage point from 7 per cent per annum to 6 percent per annum. The new rule will apply to all new loans extended from 2nd October 2013.

Inviting attention to the Circular BM 1093 issued on 1st April 2012, the new Circular BM 1112 said that based upon further periodical reviews of relevant aspects, including general interest rate scenario, bank's non-interest incomes and need for maintaining balance between burden on borrowers and banks' commercial considerations, it has been decided to reduce ceiling interest rate on personal and housing loans to 6 percent per annum.

The circular further added that the banks should treat the ceiling interest as the maximum and not the entitlement, and that they shall continue to ensure need –based flow of credit to all productive sectors including agriculture, industry and small and medium enterprises. Priority sectors like education shall be given liberal credit and at relaxed terms, the Circular BM 1112 said.

Additionally, the Circular urged the banks to explore the possibility of waiving insurance for small borrowers/bearing cost therefor themselves. "They shall, also review insurance arrangements so that premium is arrived at reasonably and there is no provision for making extraordinary profit on tie-ups for insurance – a cover to benefit banks themselves too," the Circular said.

Other CBO directions required the banks to consider, at their discretion, rescheduling and providing liberal terms of repayment for non-performing personal/housing loans, depending upon borrowers' social and financial conditions, noting that broad parameters for rescheduling have already been set in Circular BM 977 dated 25th September 2004.

For full details on the Circular, please click here .

FSU Holds Meeting on Assessment of Vulnerabilities in Macro-Financial System  (02/10/2013)

The Financial Stability Unit (FSU) led by its Head Dr. Qais Al Yahyaei held a presentation for bankers on the quarterly assessment of vulnerabilities in the Omani Macro-Financial system here at the Lecture Theater on Monday September 30th 2013.

Beginning the deliberations of the event, Dr. Qais observed that the quarterly assessment of potential points of distress in a financial system was very critical for an efficient analysis of the economy. He said that the FSU will hold similar presentations in the future to see that the bankers and the CBO were on the same page with regard to the assessment of vulnerabilities in the Omani Macro-Financial system.

Accordingly, a brief power-point presentation on potential points of distress was held by Dr. Moazzam Farooq, Senior Bank Analyst from the FSU, who broadly explained what the points of distress were and how they could affect the performance of the economy in the long run.

Dr. Moazzam explained how excessive reliance on the oil and gas sector for revenues can have serious repercussions on the efficient functioning of the economy. Keeping in view the fluctuations in the global oil prices, Dr. Moazzam said that there was an urgent need to diversify the sources of revenue. He said that the banks had a very crucial to play here by extending credit to the other productive sectors of the economy such as the SMEs.

In the latter part of the program, Mr. Salim Al Mahdouri Assistant Bank Analyst, held a presentation on Stress testing and explained why stress testing was critical for banks and how it can help in detecting weak spots in the banking system at an early stage.

He also held elaborate discussions on how the CBO was carrying out the stress testing and what methodologies the organization has deployed to assess the soundness of the banking system in the country.

In another presentation on 'Systemic Risk Survey' made by Dr. Deba Prasad Rath, Senior Bank Analyst, participants were informed that CBO has placed considerable emphasis on identification, diagnosis and assessment of systemic risk as a critical component of the evolving macro-prudential framework of CBO. Its introduction since first half 2013 and its inclusion in FSR 2013 was a recent effort in assessing systemic risk in Oman by quantifying and tracking, on a biannual basis, market participants' perceptions of key sources of risk in the period ahead. This cross-checks the CBO's analysis with that of the relevant external stakeholders namely, banks, market players, academia etc.

Following the presentations, a survey on 'Systemic Risk' was launched for second half of 2013, and the copies of the survey format were distributed to the participants.

Dr. Qais told Portal News Team that through the survey, the CBO aims to identify market perceptions of key sources of risk – emanating from within the Sultanate or externally – which if materialized in the period ahead, can cause significant loss of confidence in the Omani financial markets and institutions and/or disruption to the financial system.

"This assessment will align us with best international practice in the sphere, since 'Systemic Risk Survey' was emerging as an international practice with its results being included as a part of the Financial Stability Reports," Dr. Qais added.

About 50 participants representing different banks and financial institutions in the country participated in the two-hour-long meeting deliberations.

CBO's Board of Governors Issues Decisions relating To the Banking Sector  (01/10/2013)

The Central Bank of Oman's Board of Governors concluded its third meeting of the year this morning the 1st October 2013. The meeting was chaired by H.E. Dr. Ali bin Mohammed bin Moosa, Deputy Chairman of CBO's Board of Governors.

The Board reviewed the various issues on the agenda of its meeting, including the Economic and Financial report upto 30th June 2013, as well as the activity report of CBO's Departments during the period under review.

The Board has endorsed the amendments and regulatory relaxations relating to Islamic Banking Entities and Islamic banking windows of licensed local banks in order to assist them to run their business smoothly. In addition, the Board has endorsed the annual Budget of the College of Banking and Financial studies (CBFS) for 2013-2014. Besides, the Board has reviewed the Stress Testing report related to the banking sector in Oman for the 2nd quarter 2013. It has reviewed also the CBO's financial position as at the end of August 2013 and the performance of CBO's external investments during the period under review.

The Board has reviewed the financial and administrative matters of CBO and has taken necessary decisions.


H.E. Inaugurates IFSB Workshop on Risk Management  (30/09/2013)



His Excellency Hamood bin Sangour Al-Zadjali, the Executive President of CBO inaugurated the Workshop on Risk Management on Monday, 30th September 2013 at an informal inaugural ceremony held here at the Hotel Crown Plaza in Muscat.

The event was held amidst the presence of top CBO officials, IFSB officials, industry pundits and the participants of the Workshop.

The three-day workshop (until October 2nd 2013) being held in collaboration with the IFSB, will focus on Implementation of the IFSB Standards on Risk Management, Corporate and Sharia Governance for Islamic Financial Institutions.

Besides the CBO staff, representatives from Central Banks in other countries, Capital Market Authority officials, and representatives from the Islamic Banking institutions in Oman are attending the Workshop.

The current exercise attempts to provide training and transfer knowledge in the field of Islamic Banking to staff of CBO, the Islamic banks and those working with Islamic Windows in commercial banks.

During the course of the Workshop, speakers from IFSB are expected to present Working Papers on different subjects concerning the Islamic banking and finance.

The first day of the Workshop reviewed the Standards related to various forms of risk management in Islamic Banks, such as credit risks, risks in securities trading, operational risks, market risks, liquidity risks and rate of return risks in accordance with IFSB guidelines.

Likewise, day 2 will study and discuss case studies on Risk Management, besides discussions on how to share the information among the IFSB members.

Some of the topics that are likely to come up for discussions on the second day of the Workshop include discussions on the rights of the investment accounts holders and on how to ensure compliance with the governing Sharia principles.

The third day deliberations will address some of the basic tenets of Islamic Banking including – the Sharia Governance within Islamic banks and its compliance at different Islamic Financial Institutions.

Special focus will be on the roles played by various components of Sharia Governance Framework in enforcing Sharia governance in Islamic Banks - such as the role of the Sharia Supervisory Committee, the Internal Sharia Reviewer/Auditor, the Sharia Compliance Unit and the Sharia Audit Unit.

The final day of the Workshop will hold a small and exclusive session on IFSB Standards 5 (supervisory review procedures) for Banking Control Departments at CBO.

On the sidelines of the Workshop, the Working Group, assigned with reviewing the Guidelines of the quantitative standards for Liquidity Risk Management in Islamic financial institutions, will hold its second meeting at the CBO building

H.E. Leads Sultanate Delegation to GCC Central Banks Meeting  (17/9/2013)

H.E. Hamood Sangour Al Zadjali, the Executive President is heading the Sultanate's delegation to the 58th meeting of the Monetary Authorities and Central Banks Committee of AGCC being held in Manama, Bahrain.

The two-day conference (17-18 September 2013) will discuss a number of issues pertaining to banking supervision and control within the AGCC banking system, the payment systems, the AGCC 11th banking conference and developments in the context of the Monetary Council of the AGCC countries. Additionally, the delegates will also discuss other monetary and fiscal developments in AGCC countries, money laundering and financing of terrorism.

AlIzz Islamic Bank SAOG Granted Final Approval and License  (10/9/2013)

Central Bank of Oman granted final approval and license to AlIzz Islamic Bank SAOG.

The bank planned to have a soft launch on 15th September 2013 and commence operations on 30th September 2013 with all requirements in place.

AlIzz is the second full-fledged Islamic Bank, Bank Nizwa, the first, having commenced business in January 2013.

Other existing Islamic banking Windows already in operation consist of dedicated Islamic branches of Bank Muscat (Meethaq), National Bank of Oman (Muzn), Ahli (Al Hilal) , Bank Dhofar (Maisarah), Oman Arab Bank (Al Yusr) and Bank Sohar (Sohar Islamic).

CBO issues its first sets of commemorative banknotes Sheets  (10/9/2013)

The Central Bank of Oman has issued its first set of uncut sheets of RO. 1 commemorative banknotes and RO. ½ banknote for collectors. Each sheet contains 40 banknotes of same denomination with different serial numbers.

The banknotes in the sheets are legal tender for their face value and available for sell at Central Bank of Oman as per the following prices:

43rd Issue of GDBs Worth R.O. 100 Million Announced

The Central Bank of Oman has announced a new Government Development Bonds issue worth R.O. 100 million with a maturity period of four years. The 43rd issue will offer 2.75% coupon rate per annum.

The Safety Securities Prospectus, released from the Monetary Operations domain stated that the issue will be open for subscription between August 25th until September 2nd 2013, while the auction day will take place on the 3rd of September 2013 at 9.00am. Further details indicated that the interest on the new bonds will be paid semi-annually on March 5th and September 5th every year until maturity. Interest will be credited to the holder’s respective accounts maintained with licensed banks.

Investors are required to submit their bids through the licensed banks operating in the sultanate and should also apply for these bonds through the competitive bidding process. The minimum bid accepted for the competitive auction is R.O. 10,000 and in multiples of R.O.100 thereof. However, investors with applications of R.O. 1 million and above can directly submit their bids to CBO after getting endorsement from the banks.

The 43rd issue is offered to all types of investors irrespective of their nationalities residing in the Sultanate of Oman. The Government Development Bond issue is not offered non-resident investors.
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Charges Levied on FLCs Customers Capped
Circular FM 31

Responding to repetitive complaints against the high charges levied by some licensed Finance and Leasing Companies, Central Bank of Oman has put a cap on the charges levied on customers.

Central Bank of Oman Circular FM 31 issued on 29th July 2013 stipulates the maximum charges/penal interest for certain services offered by licensed Finance and Leasing Companies.

The circular states that though Central Bank desires to avoid undue intervention, the above step has to be taken in view of high charges levied by few FLCs and also of repetitive complaints received from the customers.

Maximum charges for rescheduling of loan to individuals and others have been capped at RO 10 and 25 respectively. Similarly FLCs should not charge more than 1% of the prepaid/foreclosed amount for pre-payment or pre-closure of the loan.

While service charges for providing certain basic services like no-due certificate, release letter etc., should not exceed RO 5/ per certificate, penal interest also should not exceed 2% of the lending rate agreed.

FLCs have been advised to review all other charges too and revise downward accordingly so as to keep them at reasonable level. They have been advised to communicate all the terms/conditions transparently and clearly beforehand to the customers.

In the same Circular, FLCs have been advised to pay greater attention to raise SME finance in their portfolio and also be prudent in sanctioning personal loans and encourage productive finance.

The Circular comes into effect from 1st August 2013.

For details kindly click here.

Ramadan: All Banks to Work From 9 am Till 1 pm

On the occasion of the Holy Month of Ramadan the official working hours for all the licensed banks in the Sultanate of Oman will be from 9.00 am till 1.00 pm.

A circular from H.E. The Executive President's office addressed to all banks in the Sultanate also provided detailed timings for all the services rendered by CBO.

The circular further indicated that normal working hours will resume on the first working day after Eid Al Fitr. For further details on timings for services such as RTGS, ECC and ACH transactions etc., please click here.

CBO Releases Country's First Financial Stability Report



H.E. The Executive President formally released CBO's maiden Financial Stability Report (FSR) prepared by the Financial Stability Unit in coordination with other departments in the Bank.

Speaking on the occasion H.E. The Executive President congratulated all the staff members who have been instrumental in preparing the FSR.

"By coming out with this report the Central Bank of Oman (CBO) is pleased to join the 'more-than-eighty-countries-club' of 'Financial Stability Report (FSR)-publishers," H.E. said adding that the objective of FSRs has been essentially to cover potential risks lurking at the System that comprises the macroeconomy, the markets, the financial institutions, the regulatory regime and infrastructure, all taken in a holistic manner.

"It is a proud moment for Central Bank of Oman and this achievement will go a long way in establishing and ensuring financial credibility and transparency among all the stake holders in the country and elsewhere," H.E. noted.

He expressed hope that FSR will be a useful source for both internal and external stakeholders and would act as a relevant and useful reference material for taking any stance on Oman by external stakeholders, including Rating Agencies, prospective Investors etc.

"While FSRs could not prevent the last financial crises (and for good reasons they are not meant to do so), it could emit effective signals for policy makers to act upon and contain any of such untoward crises in the future," H.E. said.

H.E. thanked all the Departments for extending their active cooperation in ensuring the publication of this Annual Report in a record short period of time. He expressed hope that this act of fraternity among CBO departments will continue in future as well.

Prior to the release of the FSR, Dr. Qais Al Yahyei, head of FSU presented a small briefing on the Report to H.E. The Executive President and all the other attendees. In addition to the brief account on FSRs, Dr. Qais also explained how the FSR's utility will benefit Sultanate of Oman at this point of its economic history.

VPs Mr. Hilal Al Barwani, Mr. Ali Hamdan Al Raisi, Mr. Mahboob Al Moosa, Mr. Rashid Al Kitany, Mr. Khalid Al Zadjali and Mr. Saeed Al Shidhani were present on the occasion in addition to Senior Managers Dr. Hussain Mohsin and Ms. Farida Al Riyami.

At the end of the program, VP BCDs/Legal/FSU, Mr. Hilal Ali Al Barwani extended his whole-hearted gratitude to H.E. The Executive President for all his support and encouragement which has helped in generating some of the best innovative ideas in CBO. He thanked all the Departments for their active cooperation and also congratulated the FSU staff for their sincere efforts which has made this happen. For full text of the Financial Stability Report, Please click here.

Ceiling on Personal Loans Fixed at 35% of Total Credit

In light of the public preference and requests from banks for creating greater room for housing finance requirements and the underlying advantages thereof, the Central Bank has decided to impose a ceiling of 35 per cent on personal loans with effect from 30th June 2014.

A Circular BM 1109 from H.E. The Executive President addressed to all licensed banks operating in the Sultanate indicated that housing loans will continue to have the ceiling of 15 per cent.

As of now the banks have the leeway to stretch the housing loan ceiling between 10 % and 15 % out of the total loan portfolio of the banks provided there is corresponding reduction in personal loan portfolio from 40%. However, this cannot continue beyond 30th June 2014 as the new rule will come into effect.

CBO Holds Board of Governors Meeting

The Central Bank of Oman's Board of Governors held its second meeting of the year on Monday, May 20th, 2013 under the chair of Dr. Ali bin Mohammed bin Moosa, Deputy Chairman of Board.

In the meeting, the Board reviewed various issues concerning the banking sector, including the review of the decisions taken during the symposium held in Bahla on the Development of Small and Medium Enterprises (SMEs) and the action taken by the CBO and the commercial banks operating in Oman to implement these decisions.

In addition to endorsing the amended investment guidelines of Bank Deposits Insurance Scheme Fund (BDIS) and discussing the BDIS annual report for the year 2012, the board also reviewed the economic and financial report of the Bank as on March 31st, 2013.

The board also took stock of the recommendations included in the report of IMF & World Bank Mission on Financial Sector Assessment Program (FSAP) and directed CBO's executive management to ensure the implementation of the recommendations to a maximum possible extent.

Additionally, the Board examined CBO's financial position as at the end of April 2013 and the performance of its external investments during the period under review. The Activity Report of all the CBO departments was also reviewed during the meeting.

The financial and administrative matters of CBO also came up for discussions in the meeting and the Board indicated that it has taken necessary decisions in this regard.

CBO Requires Banks to Allocate 5 Percent of Their Total Credit to SMEs

The Central Bank of Oman has mandated all the banks operating in the Sultanate to allocate 5 percent of their total credit portfolio to Small and Medium Enterprises (SMEs) in the country by the end of December 2014.

As per the new BM Circular 1108 issued on 6th May 2013, the Central Bank of Oman noted that in recognition of the relevance of SMEs' for diversification and growth of the economy and its potential for increased job opportunities, gainful use of domestic resources and other favourable factors, CBO stipulates to increase the contribution of banks in the financing/development of SMEs as under its provisions detailed in the Circular.

As per the Circular the lending of the licensed banks to SMEs, at any time, should not fall below 5 percent of its total credit portfolio.

The circular further stated that the percentage stipulated by the Central Bank at the moment was only the minimum target and the banks shall strive to exceed this threshold to participate in the development of SMEs.

"Banks should also note that, going forward, Central Bank may consider raising the minimum target beyond 5 percent," the Circular stated.

Additionally, the Circular stipulates that the banking sector must encourage the growth of SMEs in the country by formulating a liberal lending policy for the SME segment taking cognizance of the Government's vision and the regulatory initiatives of the Central Bank in this regard.

Likewise the Circular also advises banks to create separate departments for SMEs to cater to their needs in a better way, ensure better credit flow and extend all sorts of assistance to facilitate entrepreneurship through SME department or otherwise in project formulation, finance and business management, leads in business initiatives, technical support, sourcing of raw materials, process management, marketing etc.,

For full details and text of the BM Circular 1108, please click here .

CBO Organizes Students' Rally to Promote Traffic Safety

The Central Bank of Oman is organizing a students' rally on Thursday, May 9th 2013 to promote and create awareness about the traffic safety in the country.

The event which will be held at the Theater of Ministry of Education in Al-Watayyah at 7 pm in the evening will be formally inaugurated by H.E. Sultan bin Salim Al-Habsi, Secretary General of the Supreme Council for Planning.

Her Excellency Dr. Madiha bint Ahmed Al-Shaibaniyyah, Minister of Education, Their Excellencies' the Undersecretaries from the Ministries, officials from the Royal Oman Police, CEOs, leaders and GMs of commercial banks, officials from CBO and families of students will participate in the program.

Commenting on the student's rally, H.E. The Executive President Mr. Hamood bin Sangour Al Zadjali observed that the rally which is being held under the slogan " Your Safety is Our Goal" was in compliance with the Royal Orders of His Majesty Sultan Qaboos bin Said and His Majesty's wise directives to all segments of the Omani society to share responsibility on traffic safety. He reminded that His Majesty has called upon all the sections of the society to exert all the necessary efforts to eliminate traffic accidents in the country which were resulting in several human deaths and fatal injuries triggering negative impact on the Sultanate's socioeconomic affairs.

His Excellency also noted that CBO has constituted an internal Traffic Safety Committee several months ago to take up the task of educating and creating awareness about traffic safety among its employees. The internal Committee is comprised of a number of officials from different departments in the bank.

He pointed out that the upcoming student rally is part of the CBO's Traffic Safety Committee's endeavor to create awareness on the road and traffic safety. As part of the campaign, the Committee also organizes other awareness programs including lectures on traffic safety and a host of other such issues which have negatively impacted the society as a result of human and material loss in traffic accidents, H.E. informed.

In an appeal to the society, His Excellency stressed the need for every individual to be proactive and committed towards this noble cause not only by self-indulging in the activities but also by creating awareness about the traffic safety among their family members, friends and other people.

As part of the program, students from several public schools will participate in the program, in addition to a prize distribution ceremony which will award the winners of CBO's drawing contest meant for its staff children and organized under the slogan "Driving: Behavior and Education".

CBO Declares Friday and Saturday to be Official Weekend Holidays

In line with the Royal Directives from His Majesty to standardize the weekend holidays in the Sultanate of Oman, the Central Bank of Oman has declared Friday and Saturday to be the official weekend holidays for the banking sector in the country. A circular issued from the office of H.E. The Executive President of CBO said that all the banks including the Central Bank of Oman will henceforth –with effect from May 1st 2013 - observe the two designated days (Friday & Saturday) as the official weekend.

Thursday 2nd May 2013 Announced as holiday

Subsequent to a Royal Directive from His Majesty, May 2nd 2013 Thursday has been declared a holiday for both the Central Bank of Oman and all the other licensed banks and financial institutions in the country. A CBO circular addressed to all banks operating in the Sultanate announced the holiday.

Annual Bankers Meeting 2013 Held



The Central Bank of Oman held the Annual Bankers meeting on Wednesday April 24th 2013 at its premises in CBD Ruwi. Addressing a gathering of about 70 bankers including CBO officials, H.E. The Executive President called upon the banking community to gear up their infrastructure and tweak their policies to accelerate credit flow to SME sector in line with the Government policy.

"The Government has made SMEs as thrust area in its economic policy. The bankers will appreciate that growth of SMEs is critical to alleviating the unemployment problem in Oman. I, therefore, urge the banking community to gear up their infrastructure and tweak their policies to accelerate credit flow to SME sector in line with the Government policy," H.E. noted in his address to the bankers.

Please click here for the full text.

CD Results Worth RO 392 Million Announced

The Central Bank of Oman has announced its weekly Certificate of Deposit tender results on Monday April 22nd 2013. A statement from the CBO's Monetary Operations Domain revealed that the total amount allotted in CDs for the issue no. 814 was RO 392 Million. The average accepted rate of interest for these certificates was 0.13% while the maximum accepted interest rate was also 0.13%.

Likewise, the highest interest rate received was 0.17 percent and the lowest was 0.11 percent. The tenor of these certificates is 28 days and the maturity date is 22nd May 2013.

The statement also indicated that the next tender for the CD results will be held on 29th April 2013. The Repo Rate for the period - April 24th to 30th - is one per cent.

National Committee on AML-CFT Reviews Pertinent Issues & Achievements



The National Committee for Anti Money Laundering and Terrorism Financing which held its first meeting for the current year on Monday April 22nd 2013 reviewed its major achievements over the last one year at the local and at the global level. The meeting also discussed several other pertinent policy issues and deliberated on devising means to fill the gaps if any between the policy framework and its implementation part.

Held at the CBO premises, the meeting was chaired by H.E. Hamoud bin Sanjour al- Zadjali, The Executive President of the CBO who is also the Chairman of the Committee.

The Committee discussions also focused on the national comprehensive plan which aims to enhance the anti-money laundering and terrorism finance systems in the country. The Committee also deliberated their plans of attending and participating in international seminars such as the MENAFATF conferences and IMF workshops to develop expertise in the field.

The Committee pondered over how to overcome the challenges faced by different implementing authorities in implementing the AML and Finance of Terrorism policies and ensure that the policy implementation was in line with the best known international standards and practices.

Other topics which came up for discussion during the meeting included the progress made on the legislative aspects of the AML policies and the outcome of the final draft for amending the AML and Finance of Terrorism Law issued by the Royal Decree No. 79/2010. The amendments are being made to several aspects of the Law such as the due diligence, the preventive measures, the custom declaration, the international cooperation and the imposition of penalties in case of violations.

Additionally, the meeting also reviewed the regular follow up report slated to be discussed at the general assembly meeting of MENAFATF to be held next week in the Republic of Sudan.

CBO to Auction 42nd Government Development Bonds issue worth RO 80 million



The Central Bank of Oman has announced a new Government Development Bonds issue worth OMR 80 million with a maturity period of seven years. The 42nd issue from CBO will carry a coupon rate of 4.25 per cent per annum.

A release from the CBO's Monetary Operations Domain said that the issue will be open for subscription between April 28 and May 6th 2013, while the auction will take place on May 8, 2013. The issue settlement date will be on May 13, 2013, the release said.

Further details indicated that the interest on the new bonds will be paid on November 13th and May 13th every year until maturity date on May 13, 2020.

While the investors are required to apply for these bonds only through the competitive bidding process, they should submit their bids through the licensed banks operating in the Sultanate.

However, investors with applications of OMR1 million and above can directly submit their bids to CBO after getting them endorsed from their respective banks, the CBO statement advised.

The bonds which are direct and unconditional obligations of the Government of Oman can be used as a collateral security to obtain loans from any local licensed bank and can also be traded at prevailing market rates through the Muscat Securities Market (MSM).

The details of the bonds allotted will be recorded in the register maintained by the Muscat Clearing & Depositary Company. Prospectus and application forms can be obtained from any licensed bank operating in the Sultanate.

The issue is open to all investors of any nationality residing in the Sultanate only and those who are residing outside the country are not eligible to subscribe.

The Sultanate of Oman Government Development Bonds.

CBO Issues Cautionary Public Notice on Fraud Financial Activities

As part of its drive to create awareness and educate the public at large, the Central Bank of Oman has issued a cautionary notice warning the citizens of the country against the potential financial frauds.

In an advisory note issued from the Banking Development Department, the notice said that the CBO draws attention of the public to the widespread suspicious financial activities and attempts at fraud in the country and abroad. The public notice also explained the various methods adopted and deployed by these fraudsters to siphon off money from the innocent and gullible residents of the country.

The statement said that the fraudsters were deploying new and innovative methods, employing subtle means to loot innocent residents.

"In some cases, certain fictitious and suspicious companies and individuals based outside the Sultanate have contacted Omani citizens and expatriates via the Internet or by fax, claiming that the victim has won a lottery or a draw or offering a suspicious but profitable transaction and trading deal in return for assisting them in gaining access to or taking advantage of banking and financial facilities available in the Sultanate," the CBO statement explained.

Additionally, fraudsters were also inciting the resident to undertake speculative dealing in foreign currencies. Under the prevailing laws and regulations, the CBO statement explained that this activity is prohibited in Oman and hence no speculative dealing in foreign currency can be done.

"The so-called dealers or brokers offer these services through what has been dubbed trade representation or agency activity on behalf of institutions based abroad. They are not, in the strictest sense, licensed by the Central Bank," the CBO statement warned.

Referring to other types of offences, the public notice said that fraudsters were using fake or stolen cheques, drawn on banks abroad, and were subsequently selling these instruments to unsuspecting members of the public. "They come with an endorsement and are sold at a discount. The new holder (alleged payee) is promised that they will be able to encash these cheques at local banks for their full value, thereby assuring the victims of a good profit," the CBO notice informed.

Creating awareness on a host of other fraudulent issues that have come to CBO's notice, the premier monetary authority felt that it was necessary to issue these cautionary notices repeatedly to the general public so that they can be cautious in their approach and dealings with strangers and unauthorized entities or individuals.

"The public should restrict all their financial dealings to licensed/regulated institutions. If any doubts arise, they should seek the advice of their banks and professionals for all aspects of the deal, including assessing the accreditation, legality, and reliability of the persons or institutions offering financial products and services. They should immediately report any unauthorized and suspicious approaches to the Royal Oman Police," the advisory said.

For full details on the types of offences and financial crimes and the modus-operandi adopted by the fraudsters, please read the full text of the public notice here .

BCSB System Restored and Opened to the banks and financial institutions from 10th April 2013

"The new BCSB (Banking Credit Statistical Bureau ) system which was suspended from 17th September 2012 has been restored and opened to the banks and financial institutions effective from 10th April 2013. BCSBD (Banking Credit Statistical Bureau Domain) team in coordination with IT Department and the vendor has restored the system with all active/open credit facilities as of 31st March 2013 collected from banks and financial institutions with a short notice. In going forward, BCSBD team will cleanse the database while refreshing the data from the institutions concerned. Once this activity is completed, BCSB system will be better than ever before. BCSBD thanks IT Department and the vendor for their support without which the restoration of the system wouldn't have been a success".

Banks called upon to achieve even higher Omanisation levels

Highlighting the positive response received from banks on Omanisation requirements placed on Banks in 1995 through BM circular 762, CBO has called upon the banking sector to strive for higher levels.



In a circular BM 1105 to all licensed banks operating in the Sultanate of Oman, CBO noted; "considering the positive response received from banks, scope for further progress on the subject and increased emphasis being placed on a matter of social and national importance." The circular called for the following:

  • All banks need to strive and reach levels higher than 90%.
  • Top and middle Management category to be split into two consisting of Senior Management with Omanisation level of 65% to be achieved by December 2015, and 75% by December 2016 (plans to raise it to 90% by December 2018) and Middle Management Cadres, Omanisation level of 90% to be achieved by 2016.
  • Non Clerical cadre need to have 100 % Omanisation.

The Circular also highlighted some exemptions which included Islamic banks and Windows who will be treated separately and given four years from commencement of business for compliance with overall ratio of 90%.

For details kindly click "Omanisation of Personnel in Banking Sector"

H.E. Inaugurates Harvard's Executive Education Program



H.E. Mr. Hamood Sangour Al Zadjali, the Executive President of CBO, inaugurated the Harvard Business School's Executive Education program on "Managing Strategically, Leading for Results" on Saturday, March 9th 2013 at the Shangri La's Bar Al Jissah Resort & Spa.

The week-long program being held in collaboration with the Kuwait based – Institute of Banking Studies will impart specialized training to senior bank executives. Dr. Yaqoob Al Sayed Al Rafai, Managing Director IBS-Kuwait (KIBS), Mr. Anees Moosa Al Lawati, Acting Dean of the College of Banking and Financial Studies, Mr. Desmond Neilson, KIBS Training Director and several other local and foreign dignitaries participated in the inaugural function.

Mr. Mahboob Al Moosa, VP Admin, CCRD, & IHLD and Mr. Abdul Qahar Al Khanjari, VP ITD and Payment Systems will be attending the six-day workshop, which will come to an end on March 14th 2013. At the end of the program, participants will receive a Harvard Business School certificate, verifying that they have successfully completed the program. 52 other officials including those from Central Banks, local and foreign banks operating in the GCC region are also participating in the program.

Communication and Corporate Relations Department put up a small kiosk at the venue in Bar Al Jissah Resort & Spa, showcasing all the CBO publications including the Annual Reports, Monthly and Quarterly Statistical Reports and copies of Al Markazi Magazine for the participants and other dignitaries who will be attending the workshop.

IMF Holds AML/CFT Workshop for Supervisory Authorities



The International Monetary Fund's AML/CFT Mission to Muscat recently held a training workshop on Anti-Money Laundering/Combating Financing of Terrorism for the Sultanate's supervisory authorities.

The day-long training program held at the CBO premises saw participation of several government dignitaries, officials from Ministries of Social Development, Ministry of Commerce and Industries and Ministry of Justice in addition to those from the CMA (Capital Markets Authority) and the Financial Investigation Unit (FIU).

Beginning the session, Mr. Chady El-Khoury, the FIU Counsel and Legal Expert presented an overview of the Financial Action Task Force's (FATF) revised standards on AML/CFT. FATF is an inter-governmental body established in 1989 by the G8 countries.

Mr. El-Khoury explained that the FATF Recommendations which were first issued in 1990, were revised in 1996, 2001, 2003 and most recently in 2012 to ensure that they remain up to date and relevant, and that they are intended to be of universal application. The FATF has developed a series of Recommendations that are recognised as the international standard for combating of money laundering and the financing of terrorism and proliferation of weapons of mass destruction.

Addressing the gathering, Mr. Francisco Figueroa, IMF's senior financial expert outlined the new set of AML/CFT compliance requirements, especially with regard to its three key components, namely, Customer Due Diligence, Record Keeping and Reporting of Suspicious Transactions. He said that it was necessary for the Central Banks to ensure that these three components are included as general obligations in the law.

Mr. Figueroa called upon the regulatory authorities to install stringent customer due diligence systems, and explained that it was necessary for Central Banks to not only advise its clients and customers (banks and financial institutions) to seek all the information pertaining to their customers (in the process of a financial transaction) but also warrant them to maintain records of such information for at least five years. Additionally, if the banks notice any of the transactions to be suspicious, they should report it to the FIU immediately and the investigation unit will take care of the case further.

"Please remember that it is not our job to determine whether money laundering is going on in the country or not. We are not acting as investigators here. As a Central Banker, our job is to only determine whether all the AML/CFT compliance standards are in place or not and ensure that they are being followed stringently by the concerned parties," Mr. Figueroa said. Referring to the role the Central Banks are required to play as part of the FATF AML/CFT compliance requirements, he added that as a Supervisor, your (CBO's) role is to ensure that all banks and financial institutions effectively identify, analyze and report the suspicious transactions to the concerned authorities.

In the later part of his presentation, Mr. Figueroa explained how Central Banks should adopt a Risk Based Approach while conducting on-site and off-site examinations and risk assessments. He said that based on the approach the Central Banks are required to identify potential risks with all the financial institutions, categorize them into high risks, medium risks and low risks profiles, develop supervision strategies in line with the risk profiles and eventually initiate measures to mitigate them.

Speaking on the challenges in undertaking risk assessment measures, Mr. Figueroa pointed out that lack of guidelines as to the core elements of a sound and effective risk assessment system was a major challenge for the competent authorities. According to him another challenge was to understand the financial institution's perspective on risk assessment VS competent authorities' perspective of risk assessment.

IMF Consultant Mr. Jose Antonio Monreal, one of the members of the visiting IMF delegation, spoke about the challenges in ensuring AML/CFT compliance owing to new technological innovations and advancements. He pointed out that the advent of Internet and the Internet based technologies has triggered development of new products, new business practices and new cash delivery mechanisms. "To deal with the Internet based transactions we have to ensure deployment of enhanced due diligence systems and services. We have to have specific systems and processes in place to avoid misuse and abuse of our financial transactions," Mr. Monreal asserted.

The day-long presentation was divided into two sessions with a 30 minutes tea break between each of them. Every presentation was followed by a question & answers session allowing the participants an opportunity to seek answers to their potential queries and questions.

H.E. The Executive President, Mr. Hamoud Sangour Al Zadjali and Vice President Mr. Hilal Ali Al Barwani attended the opening session of the workshop.

CBO Reviews Swap Facility Price Mechanism

In its latest circular BM 1104, the Central Bank of Oman has indicated that it has reviewed and revised the price mechanism for Swap facility in order to ensure competitive pricing. The Master Circular consolidates the currently applicable instructions to this facility and replaces the Master Circular BM 1020 dated April 16th 2007.

As per the price review, the applicable (first leg) exchange rate for US Dollar/Omani Rial will be the mid-rate between bid and offer rates as per the Central Bank of Oman quotations, i.e., 0.384500 Baizas for one U.S. Dollar and the applicable domestic (Omani Rial) benchmark rate will be the prevailing Repo Rate charged by the Central Bank of Oman for Repo transactions with licensed banks. Likewise, the applicable external (U.S. Dollar) benchmark rate will be U.S. Dollar One Month Libor Rate as fixed by British Bankers Associations of the preceding Friday. The circular said that the rate will apply irrespective of the swap duration and will prevail from the date of issue until next issue.

Additionally, the circular said that an adjustment rate may be added to the domestic benchmark rate, for the time being. The adjustment rate is set at plus 100 bps. On the Limit, the CBO circular indicated that the facilities of discounting/rediscounting of Commercial Papers and this Forex Swap will be operated under an overall limit of 25 percent of the latest applicable net worth of the Bank (as stipulated in Circular BM. 1054 dated 24th December, 2008). The Banks will have the option to avail either of the facilities or a combination of both within the overall limit allocated. The Swap facility shall be for the duration of overnight to a maximum of one month and the Swap operations can be carried out for the same day value to spot date value.

Swap facility is a window to assist licensed banks obtaining Omani Rial short term liquidity needs in addition to other available facilities in place. The Central Bank of Oman provides the Swap Facility for buying US Dollar Spot against selling the same forward.

CBO Holds Training Program on Islamic Sukuk




The Central Bank of Oman is holding a five-day training program on "Theoretical and Operational Aspects in Implementing Islamic Sukuk"-- for creating awareness on the subject for its employees and other concerned parties such as the Capital Markets Authority (CMA) and the Ministry of Finance.

The training is part of the premiere monitory authority's efforts to promote learning among its staff in the back drop of Islamic banking operations beginning in the country.

Speaking to the portal news team, Mr. Duraid Al Asfoor, Assistant Manager BED, who is also the Head of the CBO's Islamic Banking Staff Development Task Force (IBSDTF) said that these workshops will impart the necessary training to the concerned staff involved in the regulation of Islamic banking in the country and also generate a common understanding about the subject among them.

Giving a brief account on the activities of the workshop, Mr. Duraid informed that the workshop will highlight various aspects of "Sukuk" which is considered to be the fundamental tool and a primary instrument for raising capital and liquidity for Islamic finance.

Besides discussing the core and fundamental principles of the "Sukuk in Islamic Finance", the workshop will also clearly demarcate and explain the differences between different Islamic Sukuk such as Murabaha, Ijara etc.

Additionally, experience of different countries which have implemented "Islamic Sukuk" will also be shared, discussed and analyzed at the workshop deliberations.

Apart from 16 in-house participants from BCDs (who also are the members of the newly formed Islamic Banking Staff Development Task Force), about 14 participants representing the Capital Markets Authority (CMA), the Ministry of Finance, the Muscat Securities Market, the Tax Authority and the Supreme Council for Planning are also participating in the workshop deliberations which will come to an end on Wednesday, February 6th 2013.

The five-day training workshop being held under the auspices of H.E. The Executive President and in collaboration with Islamic Research & Training Institute (IRTI), of the Jeddah-based Islamic Development Bank, is the second of its kind this year, after the recently concluded session on Islamic Finance, where delegates from about 10 countries participated.

CBO Organises a Workshop in Islamic Finance

The four-day workshop on developing human capital in Islamic finance began on Sunday, January 27th 2013 at the City Seasons Hotel in Al-Khuwair where H.E. The Executive President, Hamood Sangour Al Zadjali will hand over the certificates on Wednesday 30th January 2013. The workshop is organized by CBO in collaboration with Bank Negara Malaysia and Islamic Development Bank.

Mid-Year Review of the Omani Economy 2012

The CBO has brought out the Mid-Year Review of the Omani Economy for 2012 covering recent macroeconomic developments in the Sultanate.
Feedback on the Mid-Year Review of the Economy 2012 may be sent to ersd@cbo.gov.om

H.E. Presides Over CBFS Graduation Ceremony



H.E. The Executive President presided over the 8th batch graduation ceremony of 46 MBA students which was held on January 14th 2013 at the CBFS campus in Wilayat Bousher.

The ceremony held in collaboration with the Glasgow, UK based University of Strathclyde, saw participation from University officials, CEOs and GMs of local commercial banks, CBFS board members and the family members of the graduating students.

The ceremony which was held for the 11th time this year, marking the successful completion of the graduation program by the MBA students.

Mr. Anees Mousa Baqir Al Lawati, CBFS Acting Dean, said that the CBFS' MBA program is designed in such a way that the students are equipped with the relevant management experience essential for meeting the current job market demands. He also affirmed that CBFS was not only contributing in enabling the students to thrive in a rapidly changing world environment, but also excelling in creating a strong and robust human resources development system.

CBFS is holding the MBA program in collaboration with the UK based university - University of Strathclyde - for over 12 years now, ever since it began offering the course in 2001. While more than 270 students have so far successfully completed the MBA program, the number of enrollments for the current year has already reached 160.

It may be interesting to note that a recent poll titled "Global MBA Rankings 2012" by the Financial Times (British Daily) has ranked the University of Strathclyde's MBA programme to be one among the top 100 best Post-Graduate (Master's Degree) programs being offered by different universities in the world.

CBO Urges Public Not to Tamper Banknotes

The Central Bank of Oman has appealed to the general public urging them to abstain from tampering the currency notes. In a press release issued here on January 5th 2013, the Central Bank of Oman observed that some members of the public were in the habit of putting stamps and stapling pins to the currency notes, while some others tamper the bank notes by noting down numbers and scribbling names on them, which the premier monetary authority referred to as uncivilised behaviour and said that it may attract penal action. The CBO further said that such a treatment to the notes will impact the shape, the quality of the banknotes and therefore it was necessary to acknowledge that these are uncivilised behaviours and that they are punishable under the provisions of law. The press release further stated that such an activity will have a negative impact on the legal tender and result in the disfiguring of banknotes.

CBO Issues Circulars Revising Application and Licensing Fees

The Central Bank of Oman has announced the revision of fee structure for application and licensing of all banks, finance and leasing companies and money exchange houses in the Sultanate. In the circulars BM 1103, FM 30 and ME 27 addressed to banks, finance and leasing companies and money exchange houses, respectively, CBO said that the new fee structure shall be applicable with effect from January 1st 2013.

The circulars stated that the CBO's of Board of Governors after reviewing the fee structure at its meeting on 23rd December, 2012, and also considering the time span since the last revision, have resolved to revise the fee structure. As per the circular BM 1103, the revised fee for application to conduct banking business in the Sultanate has gone up from RO 5000 to RO 6000. Similarly, as per circular FM 30, the revised fee for an application to start finance or a leasing company has also gone up to RO 3000 from the existing RO 2500. Likewise, the same for the Money Exchange Cos has increased to RO 600.

For details kindly click below:-

CBO Issues Islamic Banking Regulatory Framework

In pursuance to the Royal Decree 69/2012 which amended the Banking Law 2000, the Central Bank of Oman has issued the much awaited Islamic Banking Regulatory Framework (IBRF). The IBRF running into 591-pages is a detailed and comprehensive document covering all aspects of Islamic banking.
Issuing the Circular IB-1, the first ever under the head Islamic banking, the CBO communiqué revealed that the IBRF document has been categorized under different titles and all issues concerning with Islamic banking such as the info on licensing requirements, the general obligations and Governance, the accounting standards and auditor reports, the powers of supervision and control, the capital adequacy, the credit risks, the market risks, the operational risks, the liquidity risks and miscellaneous can be obtained in the document.
The Islamic Banking Regulatory Framework (IBRF) document has been uploaded on the CBO Internet website enabling easy reference for all the concerned and interested parties.
For full details on Islamic Banking Regulatory Framework kindly Click here

41st Issue of GDB Evokes Overwhelming Response

The Central Bank of Oman's 41st issue of government development bonds worth OMR 100 million received a remarkable response from the domestic investors and institutions. The bond, which was auctioned on December 3rd, was oversubscribed by OMR 79.5 million and received bids worth OMR 179.5 million, as against the Issue amount of OMR 100 million.
It may be noted that most of the previous issues by CBO had also evoked similar overwhelming response from the investors, including the 40th Issue, where total amount of its bids was OMR 209 million, and the issue amount was OMR 100 million.
As per the data received from Monetary Operations Domain, a large number of commercial banks, including specialized banks operating in the Sultanate applied for the 41st Issue. The sector wise allotments report revealed that the commercial banks got the major share of the allotments. The banks which bid for the highest number of bonds, applied for issues worth OMR 103.70 Million, out of which they received allotments worth OMR 57.19 Million. Likewise the pension funds companies which also applied for issues worth OMR 56.13 million received the second highest allotments in bonds at OMR 33.80 million in the auction.
The third largest share of allotment of 41st Issue was garnered by local Financial Institutions. They were qualified for an allocation of OMR 7.5 million worth of bonds out of their bids amount of OMR. 8.64 million.
On the other hand, however, individual investors' participation in the new bond issue was notably slender. This sector's bids amounted to only OMR 0.03 Million, and there were not eligible for any bonds allotment.
The average yield equivalent percent to the accepted price for the current issue was 2.27 percent at price of OMR 104.610. While the highest yield equivalent was at 2.45 percent for OMR 103.745, the lowest was at 1.89 percent to an accepted price of OMR 106.460.

41st Issue of Government Development Bonds Announced

The Central Bank of Oman has announced its 41st issue of government development bonds open for subscription from November 17th, 2012. The size of the new issue is fixed at RO100 million with a maturity period of five years and will carry a coupon rate of 3.25 per cent per annum.
According to a release from CBO's Monetary Operations Domain, while the issue will be open for subscription between November 17th and November 29th, 2012, the auction will be held on December 3, 2012. The issue settlement date will be December 5, 2012. Likewise, interest on the new bonds will be paid on 5th of June and 5th of December every year until maturity date on December 5, 2017.

CBO Issues Silver Coin to Commemorate Muscat's Selection as 'Arab Tourism Capital'

To mark the selection of Muscat as the "Arab Tourism Capital" for the year 2012, the Central Bank of Oman has issued a silver commemorative coin which depicts a coloured logo of the occasion. A circular BM No.: 1098, from H.E. the Executive President's Office advised that the commemorative coin was a legal tender for its face value and that it should be accepted by all banks when presented by the public.
The circular further stated that the coin weighing about 28.28 gms and in denomination of R.O 1 can be purchased from Central Bank of Oman at a price of R.O. 26.

CBO Urges Banks to Update Customer Information

CBO urges all the commercial banks to update customer profiles on an on- going basis as this will enhance banks to monitor transactions and issue alerts to avoid possible fraudulent transactions. This will also help the banks in contacting customers on time in case of attempted frauds.

Arabic version

Public Finance Management Anchored on Fiscal Sustainability:

Enhancing Non-hydrocarbon Revenues and Capping Spending Flexibility in Oman

This paper analyzes a number of fiscal indicators for Oman over the recent five-year period with the aim of assessing recent trends in non-hydrocarbon government revenues, the performance of the state budgets, and recommending measures that would promote fiscal sustainability. The prevailing trend over the five-year period selected for this study pointed to some stagnation insofar as non-hydrocarbon government revenues were concerned, which to a great extent was in contrast to the overall economic performance. Moreover, actual government expenditure has been significantly above approved budget approbation. Two key measures are suggested in this paper to mitigate these two trends. First, enhance non-hydrocarbon government revenues by assessing their existing sources and subsequently implementing effective measures to redress the situation. Second, introduce some parameters linked to the approved budget in order to limit public expenditure flexibility even in time of favorable crude oil prices.

Assessment of Liquidity Conditions of Commercial Banks in Oman

In order to make an assessment of liquidity conditions in the banking system in Oman, the paper reviewed following indicators:
a) growth of credit and deposits at the aggregate as well as sectoral levels;
b) commercial banks' net foreign assets position;
c) their excess reserves with the CBO;
d) lending ratio of the commercial banks; and
e) the interest rate scenario prevailing in both money and credit markets.
The liquidity conditions continue to remain comfortable with the banking system in Oman consistent with easy monetary policy pursued by the CBO. Easy liquidity condition in the banking system could be observed from large roll-over of CBO CDs and commercial banks' excess reserves with the CBO. Despite low global interest rates, banks in Oman built-up sizable amount of assets abroad, implying excess liquidity in the banking system relative to its demand. Interest rate scenario in Oman is characterized by softening trend due to excess liquidity. Despite buoyancy in the MSM and likely issuance of a number of IPOs/ rights issues in 2012, their impact on bank liquidity may at best be frictional, unless issuances of large IPOs are bunched together. There is no regulatory constraint which may come in the way of credit expansion in Oman. The present liquidity position is appropriate and does not warrant any proactive action by the CBO to support the recovery

CBO to License Islamic Banking Through Exclusive Islamic Banks and Windows of Existing Licensed Banks

Circular BM 1081

Deemed as one way of doing banking business under the Banking Law, Authorized Islamic banks and Islamic banking windows, shall be subject to the overwhelming requirement of Shariah' compliance in addition to conforming to other applicable requirements under the Banking Law and other laws.

Islamic banking is responsible banking based on faith wherein certain lofty social, religious and morals principals are  paramount. Nothing should be done to undermine the basis and attract risks, financial, operational, reputational, and legal. The imperatives of Shariah compliance is emphasized. There should be no compromise on prohibition of riba, gharar or association with the forbidden, sanctity of contract shall be recognized and observed in details of disclosure and enforcement.

Accordingly, applicants, proposed entrants and existing licensed banks proposing to do Islamic banking, shall first and foremost familiarize themselves with requirements of Shariah' compliant banking to equip themselves in all respects and demonstrate the same to the Central Bank at the time of application.

CBO Announces New Set Targets for Omanisation of Personnel in Finance & Leasing Companies

CBO's Board of Governors has decided to increase the Omanisation ration requirement in all Finance and Leasing Companies to be at least 75% and 80% by the end of 2011 and 2012. In the top and middle management positions, it should be 50% Omanised and 95% for clerical and 100% non-clerical staff by the end of 2010.

CBO Issues BM 1080 Circular to Banks on Outsourcing Regulations and Guidelines

CBO has issued policies and guidelines for outsourcing by licensed banks as it poses a significant risk implications on banking services with respect to confidentiality to banking operations. It also impacts employment and career opportunities for Omanis and tax implications.

CBO Announces New Set Targets for Omanisation of Staff in Money Exchange Companies

CBO's Board of Governors has decided to increase the Omanisation ration requirement in all Money Exchange Companies to be at 55% by the end of 2011, 60% by the end of 2012 and to reach 65% by the end of 2013.

CBO Issues Circular BM 1078, FM 27 and ME 23 on Combating Frauds
CBO's minimum requirement to Banks, Financial Institutions and Money Exchange Companies for combating frauds is: 1. to have policies and procedures in place to control and avoid fraud occurrence, 2. Investigate, follow up and take action against fraudsters, 3.Prompt Report to be sent to Royal Oman Police and CBO.