The specifics of banking in Oman

Oman's banking system plays a key role in ensuring financial stability and facilitating business growth. It is shaped by both local and international economic dynamics. The country's strategic location along important trade routes also strengthens the banking sector, facilitating international trade and attracting foreign investment.

Oman's Banking System

Banking remains a key pillar of Oman's financial sector, providing the majority of lending to individuals and businesses—both state-owned enterprises and the private sector. Recent years have seen an expansion of lending and deposits, with these metrics growing in line with banking services and the overall economy. The sector faces challenges in ensuring continued profit growth while addressing long-standing issues of excessive spending. The introduction of financial technology (fintech) and increased consolidation are contributing to this, as are the Sultanate's overall development plans, within which banking remains an important component of Oman's economic diversification strategy.

The primary supervisory and regulatory authority for this sector is the Central Bank of Oman (CBO). The CBO is responsible for both Islamic and conventional banks, as well as finance and leasing companies and licensed foreign exchange bureaus. Furthermore, in March 2024, Royal Decree No. 20 of 2024 established the Financial Services Authority (FSA). This transferred responsibility for insurance and capital markets to the CBA, freeing the central bank from its role in the banking sector. At the same time, all local Omani banks are required to list their shares on the Muscat Stock Exchange (MSX), where they are supervised and regulated by the FSA, which replaced the Capital Markets Authority.

The powers of the Oman Budget Authority (CBO) are determined by the new Banking Law, which came into force in January 2025 and repealed the previous banking law, enacted in 2000. The new legislation strengthens consumer protection, expands the scope of regulation to include new financial institutions, increases capital requirements, and imposes stricter penalties for non-compliance, reflecting the growth of Oman's economy and banking sector.

The Central Bank of Oman (CBO) licenses investment, Islamic, and conventional banks, as well as foreign banks wishing to open branches in Oman. All banks are required to comply with International Financial Reporting Standards (IFRS). Islamic banks are required to adhere to the Islamic Banking Framework. Furthermore, the CBO has a Shariah Supervisory Authority within its organizational structure, which provides recommendations and opinions on compliance issues. Islamic banks themselves are required to have their own internal Shariah Compliance Councils.

In recent years, the Congressional Budget Office (CBO) has also been actively exploring the field of "green" banking. In March 2022, it signed a memorandum of understanding with Oman Environmental Services Holding Company (known as Be'ah), which aims to promote the development of small and medium-sized enterprises (SMEs) focused on green fintech, the development of a circular economy, and the implementation of environmental, social, and governance (ESG) standards. In 2022, the CBO also issued a circular on mandatory compliance with climate change and sustainability reporting requirements, followed by a similar regime at MSX.

Another initiative by the Oman Budget Authority is the implementation of the International Bank Account Number (IBAN) system in the sultanate. This step is aimed at simplifying transactions and increasing transparency, as well as modernizing Oman's banking system as a whole. The project began in the first quarter of 2024 with the introduction of IBAN for international transactions, and in the second phase, local transactions will be included in the system.

As in other sectors, Omanization targets exist in the banking sector. These are targets set by the government for the percentage of Omani citizens working in the sector.

The Central Bank of Oman's Budget Office (CBO) prepared a draft regulatory framework for digital banks, which was approved in December 2024. The regulation aims to take into account current trends in the banking sector and establish licensing guidelines for digital credit institutions. To ensure financial stability and soundness, a minimum paid-up share capital of OMR 40 million (US$104 million) is proposed for Omani digital banks and OMR 10 million (US$26 million) for foreign branches. Also presented are draft requirements for shareholders, bank personnel competency, business plans, including cybersecurity measures, and the establishment of physical offices.

This draft is the latest in a series of actions taken by the Congressional Budget Office (CBO) to ensure the sector is in line with the latest global banking innovations.

In July 2024, public consultation began on a draft regulatory framework for open banking, which was approved by the Congressional Budget Office in December 2024. This framework defines potential interoperability between banks and providers of third-party payment processing and other financial services, and is an important step toward opening the sector to fintech companies and further technological innovation. The roadmap includes data security regulations, standardized application programming interfaces, consent management systems, and authentication protocols.

The country's banking sector operates within the framework of Oman's long-term development plan, Vision 2040. This 20-year strategy is based on four pillars: creating a competitive economy, a creative society, responsible government, and a sustainable environment. A well-developed, robust, and inclusive financial sector is vital to achieving all of these goals.

Furthermore, the Medium-Term Fiscal Framework (MTFF), launched in 2020, aims to strengthen fiscal discipline. The third major program is the $5.2 billion Future Fund of Oman (FFO), launched in January 2024 by the Oman Investment Authority. The FFO aims to attract more foreign direct investment to the Sultanate and encourage investment in small and medium-sized enterprises (SMEs).

Small and medium-sized enterprises (SMEs) are central to much of the Sultanate's planned development, and Oman Vision 2040 also targets them, seeking to unlock their potential for job creation and overall economic diversification. For banks, this has led to a reassessment of their SME lending system.

There are 19 licensed banks operating in Oman, including local commercial banks, Islamic banks, and branches of foreign banks.

Advantages of the Omani Banking System

• Reliability and Security

Oman's economy is supported by government regulators, making it a safe haven for asset storage.

• Confidentiality Guarantees

Client data protection is ensured by strict legislation.

• Global Access

Omani banks offer international transactions and multi-currency accounts. A wide range of services. Clients have access to corporate, investment, and trust accounts.

Oman Banks

Local Traditional Commercial Banks (Market Leaders)

• Bank Muscat is Oman's largest bank by assets, deposits, and market share. It is the cornerstone of the country's banking system, holding leading positions in retail, corporate, treasury, investment banking, and asset management. The bank has the widest branch network and has held the title of best bank in Oman for seven years.
• Bank Dhofar is a strong second-tier player with a growing digital presence and a solid banking presence in the corporate and SME segments. More than 100 branches and a network of 164 ATMs.
• National Bank of Oman (NBO) is one of the country's oldest banks, known for its conservative approach to risk management and strong regional trade ties, particularly with India and the Gulf states. It has an extensive network of 60 branches and 182 ATMs.
• Oman Arab Bank (OAB) is a modernized, business-oriented bank increasingly focusing on services for corporate clients and small and medium enterprises. Its shareholders are Oman International Development and Investment Company SAOG (51%) and Arab Bank PLC (49%). It operates 65 branches and 152 ATMs in convenient locations throughout the sultanate.
• Sohar International Bank — Founded in 2007, Oman Development Bank (ODB) is a fast-growing, innovation-focused bank formed through consolidation, with a strong focus on digital banking and corporate services.
• Oman Development Bank (ODB) specializes in financing small and medium-sized enterprises, industrial projects, and government-supported development initiatives.

Islamic Banking

Islamic banking is a strategically important growth segment in Oman and operates in accordance with strict Shariah standards.

• Bank Nizwa is the first and largest dedicated Islamic bank in Oman, a leader in Sharia-compliant retail and corporate products.
• Alizz Islamic Bank is A digital-focused Islamic bank with a strong presence in real estate, construction, and SME finance.
• Islamic Windows of Conventional Banks. Large banks such as Bank Muscat and Bank Dhofar are opening Islamic banking windows, expanding their reach without establishing separate legal entities.

Foreign Banks Operating in Oman

Foreign banks play a specialized but influential role, particularly in trade finance, multinational corporations, and cross-border transactions.

• HSBC Oman is the largest foreign bank serving multinational corporations, large local businesses, and government entities that adhere to global standards.
• Standard Chartered Bank Oman is Specializes in corporate banking, trade finance, and treasury services.
• Burgan Bank Oman is a regional player in the Gulf region, supporting cross-border transactions between Kuwait, Oman, and neighboring markets.

Types of Bank Accounts in Oman

• Current Accounts. Ideal for everyday transactions, these accounts offer easy access to funds through checks, debit cards, and online banking.
• Savings Accounts. Designed to help customers save money while earning interest, these accounts provide easy access to funds when needed.
• Investment Accounts. These accounts offer higher returns than savings accounts and typically require a commitment period. These include fixed deposits and other fixed-term investments.
• Children's and Youth Accounts. These accounts promote financial literacy among younger generations and offer features such as no maintenance fees and savings incentives.
• Joint Accounts. These allow two or more individuals to manage shared funds, making them ideal for family expenses or business partnerships.

Bank Account Opening Procedure in Oman

• Choose a Bank That Meets Your Business Needs. The first step is finding and selecting a bank that meets your needs. Consider the bank's reputation, fees, account features, available services (such as online banking and mobile apps), accessibility relative to your location, and any specialized services or expertise it provides for your industry.
• Gather the necessary documents and information. Once you've selected a bank, you need to gather all the necessary documents and information to complete the account opening process. Depending on the bank's requirements, additional business-specific documents may be required.
• Submit the application. After gathering all the necessary documents, you'll need to complete an account opening application provided by the bank. This application typically asks for information about your company's ownership, organizational structure, and other important information. This application must be submitted to the bank through one of its designated methods (in person, online, or by mail) along with the required documents.
• Wait for approval from authorities. After submitting your application, the bank will review it and the accompanying documents to ensure they comply with its rules and legal requirements. You will need to be patient; This verification process may take some time before approval. At this stage, the bank may also conduct a background check or request additional information.
• Account Activation. If your application is approved, the bank will activate your account. This typically involves signing the relevant agreements, creating account access credentials (usernames and passwords), and funding the account with the required initial deposit. It's best to confirm specific requirements and timelines for account activation directly with the bank, as each bank may have its own unique procedures.

Non-residents can open a bank account in Oman, which can be either personal or corporate, but the requirements differ slightly. The process typically involves submitting the following documents:

• Passport with a resident visa or stamp.
• Resident ID card issued by the Royal Oman Police.
• Letter of reference from a bank in your home country or a recognized organization.
• Proof of address – this could be a rental agreement, utility/phone bill, or a letter from your employer confirming your address.
• Statement of the purpose of the account. Additional information about the source of funds and the intended use of the account may be required.

Non-residents should check with their specific bank for detailed requirements, as they may vary.

Opening a Bank Account Online

Several banks in Oman offer the option to open bank accounts online. This process typically involves:

• Submitting an online application. Complete the online form with your personal information.
• Uploading required documents, such as your passport, residence visa, and proof of address.
• Electronic verification. This may include a video call or digital verification methods to confirm your identity.