“Central Bank of Oman has taken up with Ministry of Finance the matter of issue of Sukuk,” central bank executive president Hamood Sangour al-Zadjali said in emailed comments to Reuters, received on Sunday.
“Various details will be looked into,” Zadjali added without elaborating. He noted that introducing liquidity management instruments into markets had historically proved to be a challenge, but said it would be addressed in this case.
Oman announced last year that it would introduce Islamic finance, becoming the last country in the six-nation Gulf Cooperation Council to do so. Business activity is expected to start early next year, conducted by two full-fledged Islamic banks and the Islamic “windows” of six conventional banks.
A key issue for the bankers is how they can manage their funds in the fledgling Islamic money market; bankers have been hoping authorities will issue sukuk (Islamic bonds) and other forms of sharia-compliant paper that could be used for this purpose.
Rules for Islamic banking which the central bank published last week tightly restrict the use of tawarruq, a controversial form of Islamic transaction. Some bankers have complained that restricting tawarruq will make their liquidity management harder and expensive, slowing growth of the industry.