Oman First Islamic Finance & Banking Conference was held on the heels of the interest sparking u-turn in the Sultanate’s banking policies embodied in a decree authorizing the establishment of new Islamic banks, and offered first hand insight into the latest trends and dynamic changes in the Sultanate’s financial sector.
Oman was until recently the only Gulf state that did not constitute of banks offering Islamic products and services. However, the Central Bank of Oman, in May 2011 announced it would allow conventional lenders to run sharia- compliant operations in a bid to keep investment funds within the country.
Islamic banking, comprises of banking operations that exclude the use of the interest rate “interest free banking” amongst other aspects, and is one of the fastest growing segments of the international financial system, with an annual growth rate exceeding 20 percent over the past decade. Islamic assets stood at USD 1 trillion in 2010 and are expected to reach USD1.6 trillion in 2012.
In Saudi Arabia, Sharia-compliant financing accounts for 57 % of the total lending and all retail banking activities are Sharia compliant. In the UAE and Qatar, Islamic banking share of assets has grown at a compounded annual growth rate (CARG) of 38 per cent and 50 per cent respectively, over the recent years.
These figures provide more than just a hint at how Islamic banking will fare in Oman, as Islamic banks and windows are set to capture a significant share of the country's estimated $42bn held in assets over coming months.