Islamic banking services in the Sultanate will witness robust growth during 2013, says Ahmed al Musalmi, Deputy CEO, National Bank of Oman. The introduction of Islamic banking has certainly increased market dynamics. NBO has unveiled “Muzn” brand of its Islamic banking window with the plan to allocate RO10m capital to this.
NBO also plans to raise RO 25m through a sub-debt of which RO15m has already been taken. The two Islamic banks ( Bank Nizwa and Alizz Islamic) have raised a total of RO150m through an IPO with the aggregate paid up capital of RO 250m. Oman Arab Bank launched its independent Islamic banking window under the brand name “Al Yusr” and is all set to launch its Islamic operations with the five branches across the major cities of the Sultanate during this year, said Azmat Rafique, Head of OAB Islamic Banking. The sultanate’s banking sector will see a host of new opportunities arising under Islamic banking services, Rafique added.
Ahlibank is also all set to launch its Islamic banking services window across Oman under the Al Hilal Islamic Banking Services brand. To support their growth plans, including Islamic windows, Bank Muscat and Ahli Bank have raised RO 96.7m and RO 25m respectively in the form of Rights Issue. Oman Arab Bank has also raised RO 50m in the form of Sub-debt for its growing capital needs. Hence, these market developments will certainly have significant implications on the competitive landscape, says Al Musalmi in an exclusive interview with Oman Observer.
Nevertheless, consistent with sustained recovery of the Omani economy, the monetary and banking indicators in Oman continued to strengthen. All the conventional banks are one by one started launching Islamic Banking windows following the issuance of regulatory framework by the Central Bank of Oman. With the launch of Islamic Banking, the banking sector penetration in the economy is expected to increase further.
The starting up of two new Islamic Banks ( Bank Nizwa and Alizz Islamic) operations, as also the additional capital raised by the conventional banks is expected to intensify competition within the sector going forward. The capital deployment challenges and the prevailing competitive pressure are likely to impact the margins of the sector.
The year 2013 is seeing the opening and activation of several ‘Shariah-compliant’ banks and windows — providing products which prohibit interest payments and investment in alcohol or gambling firms in accordance with Islamic law.
Experts say, Islamic banks are unscathed despite of financial crisis. The collapse of leading Wall Street institutions, notably Lehman Brothers, and the subsequent global financial crisis and economic recession, are encouraging economists world-wide to consider alternative financial solutions. Attention has been focused on Islamic banking and finance as an alternative model because Islamic banks proved to be very resilient during the current global financial crisis.
There can be no doubt that Islamic finance has an exciting future, and the quest for a financial system based on moral values rather than greed and fear, is bound to enhance its position in the global system, add experts.
According to Abdullah Al Jabri DGM at ahlibank, one of the unique and salient characteristics of Islamic banking is the integration of ethical and moral values with the banking operations.
The ethical and moral consideration of Islamic banks cannot be detached and their behaviour should be consistent with the moral and ethical standards laid down by the Islamic Shariah. All Islamic banking windows have to make this characteristic a central pillar in all their products and services.
Oman Daily Observer
