Challenges for Islamic Banking in Oman

AGENDA Strength of Islamic Banking in Oman Legal Reforms Products Development Pioneer of Islamic Banking

Strength of Islamic Banking in Oman CBO’s Objectives Credible Banking Proposition Customer Protection Efficient Mobilization of Capital Effective Regulatory Oversight Inclusion of Shariah Sensitive Market Segment Compliance with International Best Practices

Components of IBRF Licensing Requirements Capital Allocation Set up/ Policy requirements Sharia Governance Framework SSB / Sharia Reviewer Fit & Proper criteria Window Model Bank within bank Direction for business, control & support units Risk Management Capital adequacy ratio Liquidity Management Accounting & Reporting Framework AAOIFI standards IFRS conflict disclosures

Challenges of Islamic Banking in Oman

Funds Segregation Challenge System and Controls Funds Segregation Challenge Fundamentals Sharia Framework IT System Separate Book Funds Segregation Policies CBO Framework Funds Segregation Assurance IIFM, AAOIFI & IFSB Business Ethics Corporate Governance ALM Guidelines External/ Regulator’s Audit Sharia Inspection

Challenge of Regulatory Reforms Government patronage and regulatory reforms can play a pivotal role for the development of Islamic banking like taxation benefits Provision in Commercial codes for Islamic Banking to ensure enforceability of contract in courts like trust laws, beneficial ownership Level playing field between Islamic and conventional banks in term of products commercial viability e.g. double taxation issues Sharia Compliance Re-assurance via Centralized Sharia Board

Challenges in Product Development Need of standardization of contracts for Islamic products. Public perception management Lack of Research and Development efforts Next Generation of Islamic banking products instead of mimicking conventional banking

Pioneer of Islamic Banking in Oman

Meethaq Home Finance Started operations in 2008 First mortgage product of Oman Total portfolio is over RO 90 Mio Total Meethaq customers are over 2000 Majority of the customers are first time borrowers Pioneer of Islamic Banking in Oman

Market Leadership Initiatives Support to CBO/CMA Ifta Office First Product in Oman Public Awareness Programs/ Facebook Initiatives on MM & CM

Thank You