Central Bank Powers and Responsibilities Enhanced
Muscat, Oman
The Board of Governors of the Central Bank of Oman has been granted a range of powers and responsibilities to ensure the effective functioning of the country’s banking system. These enhancements are designed to ensure the stability and integrity of the banking system, protect public confidence in financial institutions, and promote economic growth and development in Oman.
Powers and Responsibilities
According to Article 14 of the Banking Law, the Board of Governors is empowered to:
- Select, designate or employ officials, employees, advisers, special experts, or consultants necessary for the proper functioning of the Central Bank.
- Delegate powers and duties to these individuals as needed.
- Determine the level of reserves required by licensed banks against deposits or other reserves.
- Adjust reserve requirements within limits set by law.
Regulation and Supervision
The Board is also responsible for:
- Promulgating regulations related to currency control, including limitations on foreign currency holdings by licensed banks, interest rates on non-resident accounts, and restrictions on foreign transfer of currency.
- Establishing limits on the amount and nature of foreign currencies and securities held by licensed banks.
- Issuing regulations and rules for deposit insurance and ensuring that licensed banks comply with these requirements.
Banking Business
The Board is also responsible for:
- Promulgating rules and regulations related to banking business, including provisions for collateral and loan security, interest rates on deposits and loans, and other banking activities.
- Forming committees to consider matters referred or delegated by His Majesty the Sultan, the Council of Ministers, members of the Board of Governors, or other designated officials.
Representation
The Board has been granted the authority to:
- Represent the Government of Oman in international financial and monetary agencies.
- Appoint representatives, committees or participate in activities, proceedings and negotiations with other central banks or international financial institutions.
Penalties for Non-Compliance
The Banking Law outlines penalties that the Central Bank may impose on licensed banks for non-compliance with regulations, including:
- Fines for violating reserve requirements, failing to maintain minimum capital adequacy, or engaging in unauthorized activities.
- Imposition of fines or even cancellation of a bank’s license to conduct banking business if a bank becomes undercapitalized due to a shortfall.
Rules on Bank Ownership
The Banking Law also sets out rules on bank ownership and reorganization, including:
- Prohibitions on licensed banks making changes to their organization or operation that would require them to furnish different information in their application for a banking license without obtaining prior approval from the Board of Governors.
- Requirements for reorganization and change in control of licensed banks to be approved by the Central Bank, which may impose conditions or restrictions on such transactions.
Overall, these powers and responsibilities granted to the Board of Governors are designed to ensure the stability and integrity of the banking system, protect public confidence in financial institutions, and promote economic growth and development in Oman.