Oman’s new Banking Law promotes digital banks and fintech innovation

Muscat – Issued concurrently with the Royal Decrees on the formation of a new Board of Directors for CBO and the appointment of its Governor, the new law is aimed at enhancing the legal and regulatory framework to ensure efficient response to the requirements of the modern financial system.

The Central Bank of Oman explained that Oman’s banking sector has witnessed significant development over the past two decades, which prompted a comprehensive review of the legislative framework to keep pace with the rapid transformations in the banking and financial businesses to benefit from the advancements made in digital innovation and technology in offering banking and financial services.

As per the new law, banking operations and CBO are regulated under two legislations: The first is related to the regulation and governance of CBO as a unit of the state’s administrative apparatus, while the second regulates banking business and non-banking financial activities.

The new Banking Law comprises 241 Articles, drafted according to the latest legislative methods and techniques that rely on clarity in legal language, enabling specialists and the public to understand and apply the texts. Moreover, consideration was taken on the clear and sequential breakdown of the Law.

The new Law also comprises provisions for attracting local and foreign investments in the banking sector, by allowing foreign banks to operate in the Sultanate of Oman while enhancing flexibility of investment and credit activities of licensed banks, serving as a legislative basis for banks to support small and medium-sized enterprises (SMEs) and provide funding to businesses and projects.

Moreover, a whole chapter has been dedicated to regulating Islamic banking, by enacting provisions to enhance its attractiveness, such as avoidance of double taxation on real estate and movable property when the related transactions are carried out in exact accordance with the principles of Islamic banking.

The Banking Law paves the way for the launch of digital crowdfunding platforms, open banking applications and other technology-based financial services enshrining relaxations on the regulatory requirements, whilst to encourage these activities and support financial inclusion. The law also highlights the importance of protecting the rights of customers and consumers utilizing financial services in the banking sector and other financial institutions, by enhancing the principles of transparency, fairness and disclosure of services and prices, in addition to data protection and privacy.

As for CBO’s Statute, issued under Royal Decree No. 3/2025, it comprises 21 Articles that operate as the Central Bank Act for regulating the operations and governance of CBO. These Articles define CBO’s objectives of achieving monetary stability, contributing to financial stability and ensuring the safety of banks and financial institutions, in addition to enhancing its role in achieving the Sultanate of Oman’s vision for sustainable economic development.

In addition, the Articles of the Banking Law clearly define the functions of CBO, such as issuing the national currency and maintaining its value, setting and implementing monetary policies and supervising licensed financial and banking activities.

It is noteworthy that the issuance of these legislations was preceded by the issuance of the Bank Deposits Protection Law under Royal Decree No. 47/2024, which reflects the completion of the legislative framework that regulates CBO operations and the banking sector, and establishes a legal framework that enhances the position of the Sultanate of Oman as a stable financial hub that attracts investments.

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