• 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:-

• BM 1103 Revised License Fees
• ME 27 Revised License Fees
• FM 30 Revised License Fees

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.

• Circular BM 1078

• FM 27

• ME 23

CBO Issues Mid-Year Review of the Omani Economy 2010
January 2011

The Central Bank of Oman has issued for the first time, a Mid-Year of the Omani Economy Review for 2010. The Mid-Year Review covers developments relating to the recovery of the Omani economy, price situation, monetary conditions, financial markets, foreign trade and balance of payments and macroeconomic outlook.

CBO launches Electronic Cheque Clearing System throughout the Sultanate
Saturday January 1,2011

The Central Bank of Oman's managed clearing houses in Sohar and Salalah have stopped any physical cheque clearing and settlement as cheques are now handled electronically. The primary benefit of the system is that cheques can be settled on the same day.