Islamic banking in Oman continued its rapid expansion in 2024, with total assets reaching 8.6 billion Omani rials ($22.3 billion) by December — marking a 16.6 percent increase from the previous year, official data showed. 

The segment now accounts for 19.2 percent of Oman’s total banking assets, according to data released by the Central Bank of Oman. 

Financing extended by Islamic financial institutions grew by 14.2 percent to approximately 7 billion rials. Additionally, deposits at Islamic banks and windows jumped 21.3 percent, reaching nearly 6.7 billion rials by the end of December. 

The steady growth of Oman’s Islamic banking sector reflects the rising demand for Shariah-compliant financial services and its expanding contribution to the country’s banking industry, CBO added. 

Oman’s banking system comprises both conventional and Islamic banking services. Islamic banking is offered through standalone financial institutions and dedicated windows within conventional banks, which can be local or foreign entities licensed in Oman. 

In May 2011, the CBO issued preliminary licensing guidelines to introduce Islamic banking in the Sultanate. This framework enabled full-fledged Islamic banks and Islamic windows to operate alongside conventional financial institutions. 

The initiative was formally established in December 2012 through a Royal Decree that amended the Banking Law, mandating Islamic banks and windows to form their own Shariah supervisory boards. It also authorized the CBO to create a central High Shariah Supervisory Authority. 

Following these developments, the CBO introduced the Islamic Banking Regulatory Framework in December 2012, alongside regulations governing the Hawala Settlement and Safeguard Account. 

This initiative aligned with Oman’s broader economic strategy, promoting financial inclusion, economic diversification, and responsible financial practices. 

Since its inception, Islamic banking in Oman has played a key role in advancing the objectives of Oman Vision 2040. 

“This sector has played a vital role in augmenting national savings and investment, contributing to the development of a more diversified investment base and availability of wider range of financial products and services for consumers and businesses,” CBO said. 

In November, Fitch Ratings forecasted continued growth in Oman’s Islamic finance sector, driven by increasing consumer demand, expanding distribution networks, greater use of sukuk for public funding, and ongoing regulatory advancements. 

A key development in October was the CBO’s introduction of the Bank Deposit Protection Law, extending deposit protection to Islamic financial institutions — an essential step in bolstering confidence in the sector. 

The agency added that strong economic conditions, improved asset quality, stable profitability, and solid capitalization position Islamic banks to withstand moderate financial shocks, despite regional geopolitical risks.