Oman: Strong demand for Islamic banking products projected

Yet another category of potential customers will be those who currently do business with conventional banks out of necessity and in the absence of Sharia-compliant options. They will very likely switch to Islamic banking as soon as it becomes available, he points out. The third category belongs to strict adherents of religious tenets who do not deal with conventional banks at all because they consider their activities as “haram” and “riba-based” and as a result, deal in cash only. “They’re very likely to transfer their funds and use the services of Islamic Banks and Windows. Islamic Banking in Oman will also encourage Omanis resident abroad to deal with Islamic Banks and Windows back home,” says Yousaf.

The KPMG Director is of the view that development of Islamic banking products and services in a new market like Oman will be gradual, rather than explosive. “Islamic banks will need to educate their target market customers about the Sharia-compliant aspects of their products and services, their competitive features and advantages over conventional banking. Customers who have a better understanding of Islamic banking will switch to it faster than others who may take the ‘wait and watch’ approach. There may also be skeptics who may challenge the Sharia-compliance aspects. Their objections and concerns would need to be addressed by the executive management and scholars in Sharia Supervisory Board of Islamic banks.”

The Central Bank of Oman (CBO) has opened the door for the licensing of full-fledged Islamic Banks, as well as Islamic Windows of conventional domestic and foreign banks operating in the Sultanate. In the pipeline are two Islamic Banks, Bank Nizwa and Bank Al Izz. Also gearing to launch Islamic Window operations are: bank muscat, National Bank of Oman, BankDhofar, Bank Sohar, ahlibank, National Bank of Abu Dhabi and Oman Arab Bank.

(Oman Daily Observer / 26 August 2012)

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