Omani Experts: Islamic Banks Need Liquidity Management Tools

Oman’s Bank Muscat CEO AbdulRazak Ali Issa, stressed the need of Islamic liquidity management instruments. A strong capital base must be supplemented by strong liquidity management tools. Islamic liquidity and Islamic capital markets are important for a resilient and sustainable Islamic finance system, Issa added.

Inter-bank market and debt instruments like certificates of deposits (CDs) and development bonds are available to conventional banks in Oman, but options for managing liquidity risks in the Islamic banking sector have yet to be revealed.

Hamood Sangour al Zadjali, executive president of the Central Bank of Oman (CBO), said that Islamic banks and windows need to be creative and innovative to ensure liquidity management tools are in line with Sharia requirements.

When asked whether CBO has plans to create new instruments and develop policy tools for liquidity risk management in the Islamic banking sector, he said, We will be thinking about it, and will see what can be done to make Islamic liquidity management instruments available to banks. Currently, there are no Islamic liquidity tools available in Oman, but perhaps in the future there will be some sukuk issuance through the government.

Zadjali added that CBO will issue licenses to Islamic banks and windows to start operations once the banking law is amended. Once the legislative decree for the banking law amendment is issued, the roll out of Islamic banking will start. We hope that Bank Nizwa would be able to start operations by August, Muscat Daily reported.