This week the spotlight is on regulatory developments in Oman, where the Sultanate’s Central Bank has issued a number of regulatory amendments to enhance the Sultanate’s financial industry. The amendments came into force on 1 April 2018.

The Bank has reduced the capital adequacy ratio requirements for banks from 12 to 11%. This will increase banks’ lending capacity. It is expected to make an additional 2.6 billion Riyals of credit available with 7.8 billion Rials instead of 5.2 billion Rials being released. The Bank has also decided to remove the regulatory restrictions imposed on the risk weights to claims on sovereign and central banks. It comes as the Bank looks to implement the Basel Committee guidelines.

The Bank has decided to increase the prudential limit for all currencies from 15 to 20% for three-to-six months, 25% per cent for six-to-nine months and 25% for nine-to-12 months. The aim is to give banks more flexibility to utilise available credit lines available from foreign and local correspondents at a reasonable rate. Finally the Bank has increased the prudential limit ratio of credit exposure to non-residents and placement of banks funds abroad to banks’ local net worth from 50 to 75%. It is hoped this change will provide banks with greater flexibility to manage their liquidity surpluses, diversify their revenues and increase their external borrowing capacity to finance local projects.