Oman’s Bank Nizwa seeks overseas investment opportunities to deploy funds (By IFN)

Oman’s Bank Nizwa seeks overseas investment opportunities to deploy funds

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OMAN: The CEO of Bank Nizwa, Dr Jamil El Jaroudi, said that the bank is looking to discuss a possible raise in the current cap for overseas investments for Islamic banks with the Central Bank of Oman before dormant excess liquidity becomes a problem amongst the country’s Shariah compliant financial institutions. “One of the investment opportunities for Islamic banks is equity participation. However, we are not allowed to invest more than 5% in a company as an investor,” he was quoted as saying. Islamic banks within Oman’s nascent Shariah compliant financial sector are learning to cope with the shortcomings that come naturally with any new set-up. However, many believe that the country’s regulators should hasten the process of issuing a complete set of guidelines encompassing the capital market and Takaful industry to increase the volume of Islamic investments in the country and to create an effective treasury and liquidity management system. The country’s conservative approach to Islamic banking could also prove to be restrictive to the industry’s growth, if not carefully managed. The recently-issued Islamic Banking Regulatory Framework (IBRF) stipulates that commodity Murabahah, or Tawarruq, is not allowed as a money market instrument - a decision that has already raised more than a few eyebrows. Industry experts believe that a lack of short-term liquidity management instruments could limit banks’ flexibility in managing their funds overnight and potentially increase their costs. Dr Jamil, CEO of Oman’s first Islamic bank also revealed that the bank is eyeing up to 5% of the country’s total Islamic banking market, with a view to expand to over 20 branches in the next five years.