JEDDAH: The Central Bank of Oman has approved a new Shariah-compliant regulatory framework for finance and financial leasing companies, reinforcing the country’ efforts to expand Islamic banking and attract fresh investment.
The approval was granted during the CBO’s sixth board meeting of the year, held on Dec. 29 at its headquarters in Muscat’s Commercial District, according to an official statement.
The move comes as Oman’s Islamic finance sector continues to gain momentum. In September, Fitch Ratings forecast that the country’s Islamic finance industry would surpass $40 billion between the second half of 2025 and 2026, supported by regulatory reforms and growing demand for Shariah-compliant financial products.
Fitch identified the newly approved framework as a key growth driver, noting that clearer regulations and stronger oversight are expected to enhance investor confidence and attract additional capital to the sector.
The broader Gulf region is also witnessing robust growth in Islamic finance. In the UAE, the industry’s assets exceeded $285 billion by the end of the first quarter of 2025, fueled by strong demand and an expanding sukuk market, Fitch said.
“During the meeting, the board approved the regulatory framework for finance and financial leasing companies that are compliant with the provisions of Islamic Sharia,” the CBO said in its statement.
The board also approved the CBO’s 2026 annual budget, along with those of the Banking Deposits Protection Scheme and the Oman Credit and Financial Information Center, known as Mala’a. In addition, several agenda items and reports were reviewed and corresponding decisions were taken.
Oman’s banking system comprises both conventional and Islamic institutions. Islamic banking services are offered through standalone banks as well as Islamic windows within conventional local and foreign banks licensed in the country.
The foundations for Islamic banking were laid in May 2011, when the CBO issued preliminary licensing guidelines allowing Islamic banks and windows to operate alongside conventional institutions. This initiative was formalized in December 2012 through a royal decree amending the Banking Law, mandating the establishment of Shariah supervisory boards and authorizing the CBO to create a central High Shariah Supervisory Authority.
That same year, the CBO introduced the Islamic Banking Regulatory Framework, alongside regulations governing Hawala settlements and safeguard accounts.
Although Oman remains the smallest Islamic finance market in the Gulf Cooperation Council, it continues to record double-digit growth in Islamic banking assets and sukuk issuance. Fitch estimated the sector’s size at $36 billion as of the end of August 2025, with Islamic banking assets accounting for nearly two-thirds of the total.
