Oman’s Shariah-Compliant Finance Sector Under Regulatory Oversight
Muscat, Oman - The Omani government has established a robust regulatory framework to oversee the growth of its shariah-compliant finance sector, ensuring that Islamic banks and takaful operators adhere to strict standards of shariah compliance.
Overview of Regulatory Framework
The Commercial Companies Law (CCL) requires all commercial companies undertaking shariah-compliant activities to ensure their transactions comply with the principles of Islamic law. The Capital Market Authority (CMA) regulates and supervises takaful operators in Oman, while the Central Bank of Oman (CBO) licenses and oversees standalone Islamic banks and windows operating in the country.
Takaful Insurance Law Requirements
- Takaful insurers must be publicly listed on the Muscat Stock Exchange (MSX)
- Minimum capital requirement of no less than 10 million Omani rials
- Establishment of an internal shariah committee for auditing shariah compliance
CMA Regulations and Oversight
The CMA has issued executive regulations governing the supervision of takaful operators, including:
- Segregation of assets
- Establishment of shariah supervisory boards within operating companies
- Regulation of real estate investment funds or trusts (REITs), which must establish a shariah committee to ensure compatibility with Islamic law
CBO Regulations and Oversight
The CBO has the power to:
- License Islamic banks and windows
- Inspect and audit financial statements
- Investigate breaches of shariah principles
- Impose penalties on defaulting institutions
- Suspend or cancel licenses, issue warnings, and dismiss members of a bank’s board or executive committee
Oversight of Islamic Windows
The CBO oversees Islamic windows operating within conventional banks in Oman, which must adhere to the same shariah standards as standalone Islamic banks. These windows are subject to regular inspections and audits by the CBO.
CMA Licensing and Oversight of REITs and Public Joint-Stock Companies
The CMA licenses REITs and public joint-stock companies, including those engaged in shariah-compliant activities. The authority has the power to:
- Investigate licensed entities
- Take disciplinary action against them
- Send observers to ensure compliance with regulatory procedures
Impact on Foreign Investment and Economic Growth
The Omani government’s efforts to establish a robust regulatory framework for its shariah-compliant finance sector are expected to attract more foreign investment and promote economic growth in the country.