Islamic banking in Oman is growing at a slower pace than expected and requires new legislation and stronger public awareness of the industry to flourish, Bank Nizwa CEO Jamil El Jaroudi told Zawya.
"The expectations were for a faster launch and bigger scale, but expectations do not always reflect the reality of challenges and possibilities. But this does not mean that the market in the Sultanate is not ripe for growth, it will just take time," Jaroudi said.
"We are working hard to help in tackling deterrents to growth such as lack of understanding about the principles and applications of Islamic banking among the public, although many want to carry out transactions in line with shariah law, and there is also a skills shortage in the Omani market," he added.
Jaroudi said the legal and regulatory framework in Oman supported the launch of the Islamic banking industry but that further development of legislature was needed for the sector to mature.
Bank Nizwa, Oman's first independent Islamic bank, started operations in January 2013 and has a paid-up capital of OMR 150 million (USD 390 million). The bank raised OMR 60 million in an initial public offering of 40% of its shares in May 2013.
Jaroudi said the bank had no plans to issue new sukuk, or Islamic bonds.
"We were the first to offer sukuk in Oman in the second half of 2013, despite being new in the market... Instruments should only be released when needed and when the money can be employed as quickly as required to provide revenues and returns for investors."
He said the bank planned to launch Internet banking services and other shariah-compliant products.
© Zawya 2014
