Oman Unveils New Regulatory Framework for Digital Banks
Muscat, Oman – The Central Bank of Oman (CBO) has implemented a new regulatory framework for the licensing and supervision of digital banks, effective June 1, 2025. This move marks a significant step in modernizing the country’s financial sector and aligns with Oman Vision 2040.
Licensing and Operational Structure
The framework permits digital banks to operate either as locally incorporated joint-stock companies (SAOC or SAOG) or as branches of foreign banks, provided they have regulatory approval in their home jurisdictions. Two distinct license categories are available:
- Category 1: Requires a minimum paid-up capital of RO 30 million and allows for full banking operations.
- Category 2: Requires a minimum paid-up capital of RO 10 million but comes with business limitations. These include caps on customer deposits and corporate lending, and a prohibition on proprietary trading. These limits are waived for the first two years of operation.
All digital banks must maintain a physical head or registered office in Oman. While they can open administrative offices for customer support, they are prohibited from operating traditional branches for transactions. Strict shareholding limits are also in place: individuals can hold up to 15% of voting shares, corporate bodies up to 25%, and holding companies up to 35%. Cross-ownership in multiple banks is capped at 15%.
Business Plan and Technology Expectations
Applicants must submit a comprehensive five-year business plan. This plan needs to detail their proposed digital services, target customer segments, profitability projections, and a strategy for financial inclusion. It must also outline their IT architecture, cybersecurity readiness, and disaster recovery procedures. The CBO expects digital banks to leverage modern technologies such as AI, open banking, blockchain, and cloud computing. Additionally, they must meet Omanisation targets, starting at 50% and increasing to 90% by their fifth year of operation.
Regulatory Compliance and Oversight
A crucial requirement is the submission of an exit plan alongside the license application. This plan must specify conditions under which the bank would voluntarily cease operations (e.g., due to capital or profitability issues) and detail how customer protection, risk triggers, and exit funding would be managed without regulatory assistance.
Licensed digital banks are mandated to comply with Oman’s Banking Law 02/2025, National Payment Systems Law 08/2018, and AML Law 30/2016. They are also subject to rules on digital onboarding, cybersecurity frameworks, consumer protection regulations, and fraud prevention protocols. The CBO reserves the right to request independent technical assessments at the applicant’s expense. Non-compliance could lead to enforcement actions, including license revocation, and the CBO can reject incomplete applications or withdraw approvals if inaccurate information is provided.
Click here for more on Banking
