The Central Bank of Oman (CBO) has introduced the Bank Deposits Protection Law, enacted under Royal Decree No. (47/2024), to enhance the security and stability of the banking sector. This move aims to align the Omani financial system with international standards and protect depositors from potential risks, particularly in the event of bank defaults.
The new law is designed to safeguard deposits held at licensed financial institutions in Oman. It forms a critical part of the country’s financial safety net, particularly for "small depositors" who are most vulnerable in case of a bank's insolvency. By creating a compensation mechanism that ensures a quick and efficient response, the law aims to instill greater confidence in the banking system, encouraging savings and long-term financial stability.
One of the core features of the law is the establishment of two independent funds: the Takaful Fund for Deposit Protection at Islamic financial institutions, and the Insurance Fund for Deposit Protection at conventional banks. Each fund will be managed and invested according to its specific requirements and nature, ensuring that both types of financial institutions are adequately covered.
The compensation framework offers protection up to a maximum of RO 20,000 for eligible deposits that exceed this value. Deposits valued at RO 20,000 or less are fully compensated. The law further stipulates that if a depositor holds multiple accounts with the same defaulting bank, the total sum of these accounts will be considered for compensation. However, in the case of multiple banks, compensation will be calculated separately for each bank, with the maximum limit applying to each.
The CBO has emphasized that the law not only provides financial security but also reduces systemic risks within the banking sector. By protecting deposits, the law promotes greater trust in the financial system and encourages more savings.
Recent data from the CBO highlights a robust growth in Oman’s banking deposits. As of August 2024, total deposits grew by 11.6% year-on-year, reaching RO 31.1 billion. Private sector deposits saw an 11.7% increase, amounting to RO 20.8 billion, with individuals contributing the largest share at 49.5%. This growth underscores the importance of maintaining a stable and secure banking environment for depositors. — ONA
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