Oman Becomes the Latest Entrant to the Islamic Financial Industry

By: EW News Desk Team   Date: 25 July 2011

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EW News Desk Team

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EconomyWatch, News Desk Team

 

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25 July 2011

The Oman International Bank is set to become the latest market player in the US$1 trillion Islamic financial industry, according to reports from The National.

The bank announced on Sunday that it was considering a "strategic alliance" with another financial institution within the Middle-Eastern region, in the wake of the nation hosting its first-ever Islamic banking conference.

“Oman’s move to Islamic finance comes at just the right time as ethical finance gains a foothold around the world,” said Ihab Sahili, Regional Director for International Turnkey Systems, the host of the conference.

The Oman Daily Observer added that the Islamic finance industry was likely to experience growth between 15-20 percent per year – with 63 percent of Islamic finance institutions based in the Middle East. Middle Eastern financial institution also controlled more than 50 percent of Islamic banking assets.

“The uptake of Islamic finance even in non-Muslim countries has shown that it is not simply a faith-based choice, but also a viable and ethical financial model,” said Dr Mabid al Jarhi, head of training at Emirates Islamic Bank, President of the International Association for Islamic Economics and Member of the Shari’a Board on the Dubai Financial Market. “If Islamic financial institutions in Oman chart their own course, stay away from products of ill repute such as Tawarruq (cash-for-cash products), they could grow to become serious contenders in the regional Islamic finance industry. Growth figures could match that of institutions around the world as funds that were invested in ethical institutions overseas will be repatriated.”

Industry analysts in the region have already greeted the announcement with optimism.

"It is a positive move. The bank is clearly looking to find opportunities that will take them to the next phase of growth," said Kanaga Sundar, the head of research at Gulf Baader Capital Markets in Muscat. "They may look at strong regional players who have expertise in Sharia-compliant offerings and other businesses."

 


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