Big Developments to Oman Banking Law

The start of the new year welcomed 4 new Royal Decrees which bring big changes to the banking & finance environment in Oman. On 1 January 2025, A new Banking Law (Royal Decree 2 of 2025) has been put into effect which repeals the previous Banking Law (Royal Decree 114 of 2000). Along with the new Banking Law, a law promulgating the system of the Central Bank of Oman (Royal Decree 3 of 2025) has been issued, and two further laws have been issued appointing members of the board of directors as well as the governor of the Central Bank of Oman (Royal Decree 4 of 2025 and Royal Decree 5 of 2025 respectively).

Major Changes

Amendments to the old Banking Law, which was issued in 2000 and last amended in 2012, were a long time coming. However, in what appears to be an overhaul of the banking system in Oman to modernise it, the old Banking Law has been repealed and the new Banking Law has been issued with effect from date of publication, being 1 January 2025. We understand the attachments to the Royal Decree will be available when it is published in the Official Gazette next week, and we shall issue a separate client alert on the major changes brought about by the new Banking Law.

Any licenses, permits, and approvals issued by the Central Bank of Oman (“CBO”) will continue until they expire, and renewal shall be in accordance with the new Banking Law. Any activities and operations pursuant to the licenses must be in accordance with the new Banking Law, and entities have 6 months of the date of publication within which they must reconcile their activities (with the board of directors of the CBO being able to grant two extendable periods).

A new system of the CBO has also been established. According to the new law, the CBO has separate legal personality, and enjoys financial and administrative independence. The CBO’s headquarters and primary safes must be located in Muscat, and the CBO may establish branches within Oman and abroad. We understand the attachments to the Royal Decree will be available when it is published in the Official Gazette next week, and we shall issue a separate client alert on the provisions of the organisational structure of the CBO.

Apart from the above, the board of directors of the CBO has been established as the following: (i) the Minister of Economy—Deputy Chair; (ii) the Governor of the Central Bank of Oman; (iii) the Undersecretary of the Ministry of Finance; (iv) the President of the Financial Services Authority; (iv) Sayyida Rawan bint Ahmed bin Thabit Al-Busaidiya; (v) Dr Said bin Mubarak bin Said Al-Maharrami; (vi) Dr Khalfan bin Mohammed bin Khalid Al-Barwani; and (vii) Dr Jamil bin Darwish bin Jamil Al-Shaqsi. Ahmed bin Jaffer bin Salim Al-Musalmi has been appointed as the governor of the CBO.

How can we help:

This is a drastic change that affects all licensed banks and financial institutions and will have knock-on effects for clients and customers of banking & financial institutions. Our Oman team represents a range of stakeholders in the banking & finance space, and regularly works on advisory, regulatory, and transactional matters. We would be delighted to assist.