MUSCAT : In a statement issued, the CBO indicated that the law aims to protect deposits in the event that a bank or financial institution licensed by it to receive and keep deposits defaults. The law is a fundamental element and an important part of the financial safety net in the Sultanate of Oman.

The law works to stabilize the banking sector by protecting the interests of the “small depositors” category, which is the most vulnerable group to harm in the event of a bank default, by establishing a compensation system that is characterised by speed and effectiveness, which enhances confidence in the banking system.

The main objectives of the Bank Deposit Protection are to provide comprehensive protection cover for members’ deposits in a way that encourages savings, increases and enhances confidence in the financial stability of the banking sector in the Sultanate of Oman, and reduces the effects of systemic risks in the banking sector.

The Bank Deposit Protection Law includes 31 articles, and its most important provisions are the establishment of two independent funds, namely the Mutual Fund for the Protection of Deposits in Licensed Islamic Institutions, and the Insurance Fund for the Protection of Deposits in Licensed Conventional Institutions. The management and investment of the funds of each fund were taken into account, in accordance with its requirements, and in a manner consistent with its nature.

The law has set the current compensation amount at RO 20,000 as a maximum for eligible deposits whose value exceeds RO 20,000, while eligible deposits whose value is RO 20,000 or less are fully compensated.
The law clarified that if a depositor has several accounts with the same defaulting bank, the amounts deposited in all accounts eligible for coverage by the system will be collected to calculate the compensation amount. All deposits eligible for coverage by the system for the same depositor in several banks will be dealt with independently, so that the depositor is entitled to receive a maximum of RO 20,000 from each bank.

For its part, statistics issued by the Central Bank of Oman indicated that total deposits in the banking sector recorded a growth of 11.6 percent on an annual basis by the end of August 2024, reaching RO 31.1 billion. Within this total, private sector deposits increased by 11.7 percent to reach RO 20.8 billion.
When looking at the distribution of the total private sector deposit base across the various sectors, the figures show that the individual sector has the largest share, amounting to about 49.5 percent, followed by the non-financial corporate sector and the financial corporate sector with shares amounting to 30 percent and 17.9 percent respectively, while the remaining 2.6 percent is distributed across other sectors.

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