Move comes as Gulf state opens doors to fast-growing Islamic banking industry
Oman's Al Izz International Bank, a lender under formation in the Gulf Arab state, has been given a licence to operate as an Islamic bank, following a decision to open the country's doors to the fast-growing industry, a central bank official said.
Ali Hamdan al-Raisi, vice president of Oman's central bank, told Reuters in an interview that the bank, also known as Bank Al Izz, is one of the two financial institutions that has been granted approval from the central bank to open as a fully-fledged Islamic institution.
The central bank granted the first license to lender Bank Nizwa in May, following Oman's decision to embrace Islamic finance as a way to keep sharia-compliant investment funds within its borders.
"They (the banks) might open in one or two years, it takes some time for them to establish," Raisi said. "They are in the process of being established and will become operational as soon as formalities such as regulatory requirements, raising of capital and constitution of management are met."
Bank Nizwa may begin operations by early 2012, the sultanate's central bank governor told a local newspaper earlier this month.
Oman is the only Gulf Arab state which until now has not set up a bank specifically offering products and services complying with Islamic law. Its central bank head said in 2007 that Oman believed that "banks should be universal." That stance was reversed in May.
Raisi said that the minimum capital requirement for a newly incorporated bank is 100 million rials ($259.74 million) and the bank was granted an Islamic licence in late May or early June, following the royal decree allowing for Islamic banking in Oman.
Bank Al Izz received approval to operate in September of 2010, before Oman allowed for Islamic banking. Al-Raisi said the bank decided to pursue an Islamic licence after the royal decree.