US President Biden made the announcement at the United Nations General Assembly in New York, and called on other countries to follow suit
Executive President Hamoud bin Sangour Al Zedjali said this policy was manifested in not allowing the banks operating in the country to borrow huge amounts in foreign currency to finance their operations and not allowing capital flows for speculative purposes.
He added that the Omani banking sector’s strength and ability to cope with the different economic changes taking place in the world had resulted in the banking sector not being directly affected, until now, by the global turmoil.
“The remarkable improvement in the performance of the banking sector throughout the first 11 months of 2008 compared to the corresponding period of 2007 is good evidence that the banking sector has remained not affected by the global financial crisis,” he told the official Oman News Agency (ONA) in an interview.
Total assets of
Credit given to the private sector, which was 94.6 per cent of the total credit, increased by 52.8 per cent to RO8.7 billion. Foreign assets of banks amounted to RO2.3 billion, versus RO1.9 billion.
On the liabilities side, aggregate deposits increased by 38.7 per cent to RO8.6 billion, compared to RO6.2 billion. Private sector deposits, which accounted for 72.5 per cent of total deposits, jumped from RO5.1 billion RO6.2 billion. The core capital, reserves and non-distributed profits of banks, totalled RO1.5 billion, compared with RO1.2 billion. Provisional figures for net profits, after taxes and dead debts provisions, rose to RO246.2 million from RO176.9 million.
Zedjali noted that liberalisation of credit and debit interest rates were one of the major reforms seen by the banking sector in the Sultanate. The CBO, he noted, earlier controlled the interest rate directly by capping the rates on loans granted by commercial banks, as well as deposits.
“This policy was in force from 1977 to 1993 when the CBO cancelled the interest rate cap on deposits in Omani riyals as an initial step towards liberalising interest rates. After this, the interest rate cap on loans in Omani riyals was cancelled, except for personal loans, the rate for which was set at eight per cent per annum,” he added.
Zedjali said CBO had allowed banks to decide interest rates on other loans and deposits depending on a number of factors, such as local competition and interest rate in the market for the different currencies especially the US dollar. He made clear that there was no intention by CBO at present to cap interest rates on deposits or loans.
Speaking about deposits made by commercial banks abroad, Zedjali said such deposits had not been affected by the current global crisis. “The banks are working to redeem these deposits after getting their due payments to utilise them in boosting economic activity in the Sultanate,” he added.
He pointed out that foreign deposits by Omani banks were ‘multi-purposed, as some of them have been obtained to get certain facilities, while others were obtained to pay the financial liabilities on behalf of traders and clients to import goods.”
Total deposits by Omani banks with foreign institutions stood at RO1.2 billion at the end of November, while their foreign liabilities amounted to RO1.6 billion.
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