FINANCE AND BANKS: The Omani banking sector

The banking sector is an important factor in maintaining financial equilibrium and economic stability. The Omani banking sector, which comprises the Central Bank of Oman (CBO) and various commercial and specialised banks operating in the Sultanate, is stable, highly efficient and able to respond to regional and international developments, including the growing trend towards freeing up financial services within the framework of the World Trade Organisation (WTO).
The Central Bank of Oman (CBO): The Central Bank of Oman is responsible for maintaining the stability of the national currency the Omani Rial (RO) and ensuring monetary and financial stability in a deregulated and open financial system. The capital base of the CBO which was one million Omani Rials at the commencement of operations in 1975.
The Omani banking system has experienced several mergers and as a result commercial banks which are locally incorporated and eight are branches of foreign banks.As at the end of 2005, there were also three specialised banks in operation,The Oman Housing Bank (OHB), The Oman Development Bank (ODB), Alliance Housing Bank (AHB).
Manpower in the banking sector: The banking sector is a model of successful Omanisation. The College of Banking and Financial Studies plays a vital role in preparing nationals for banking careers.
The specialist banks: The Specialist banks were set up to support national development efforts in specific fields such as housing, industry, agriculture and fisheries. Currently there are three specialist banks. Two - the Oman Housing Bank and the Oman Development Bank - are government banks, while the third - the Alliance Housing Bank - is privately owned. The three banks operate through number of branches in various parts of the country.
The Oman Housing Bank (OHB): The Oman Housing Bank (OHB) provides housing loans for nationals to enable them to purchase, build or complete their homes. Its capital has been increased to RO30 million to enable it to expand the scope of its operations and obtain loans for a larger number of applicants. The OHB charges a limited service fee for subsidised loans in response to directives issued by Sultan Qaboos. In this way the financial burden on loan applicants is minimised. The bank also grants non-subsidised loans with additional facilities to other applicants. Most of its loans are subsidised as part of the government's policy of supporting those on limited incomes.
The Oman Development Bank (ODB): The Oman Development Bank (ODB) was established in 1997 as an Omani public joint-stock company in a merger between the Development Bank of Oman and the Oman Bank for Agriculture and Fisheries. It is now a closed joint stock company, following the issue of Royal Decree No 18/2006 issued on 11th March 2006. The ODB operates on economic principles while maintaining a proper social perspective by supporting small projects. Projects supported by loans in excess are financed by the Ministry of Commerce and Industry or one of the other financial institutions. The ODB has been granted exemption from all taxes and the government subsidises the interest payable on the soft loans it grants to fund private sector projects. The bank also provides other loans on a medium or long term basis to help fund projects, as well as technical assistance and advisory services to Omani companies. In addition, it acts as an export credit guarantee agent and distributes sums from the Fisheries Research Fund.
The Alliance Housing Bank (AHB): The Alliance Housing Bank (AHB), which was incorporated in 1997 is the GCC's first private sector housing bank, and has seven branches and service centres in the Sultanate of Oman. This Bank offers mortgages on properties in the Sultanate of Oman. Its customers are Omani and other GCC nationals. The bank was set up as a joint governmentprivate sector co-operative venture in response to the dramatic growth taking place in the building construction sector over recent years. The AHB offers a range of products to the Omani public in support of the government's housing policy.