By Hasan Kamoonpuri -
MUSCAT — Oman Arab Bank launched here yesterday an independent Islamic banking window under the brand name “Al Yusr”.
The bank will launch its Islamic operations with the five branches across the major cities of the Sultanate during this year, said Abdul Kader Askalan, CEO, Oman Arab Bank.
Further, in line with CBO requirements, OAB also introduced a 3-member Shariah Advisory Board to ensure the Al Yusr operations are in compliance with Shariah (Islamic law). The OAB Shariah board members are Dr Khalid Salim al Siyabi, Dr Ahmed Subhi Ayyadi and Dr Essam Khalaf al Enezi.
In an exclusive interview with the Observer, Azmat Rafique, Head of OAB Islamic Banking, said the Al Yusr suite of banking products will have special focus on retail, SME and corporate banking segments of the market and plans are underway to launch innovative product offerings tailored to the needs of Omani customers.
OAB is well positioned to provide Islamic financial expertise to diverse segments and thereby promote the good of society as a whole. Rafique said Islamic banking, which seeks to promote the ideals of a prosperous society and stable economy based on Islam’s basic principles, is set to grow fast in Oman because the country already has a flourishing banking sector.
The amazing strides made by Islamic banking have prompted even the Western financial institutions to expand their Shariah-compliant instruments. Malaysia, Bahrain, Iran, Sudan and other countries have had their heydays since long. The reason for the growth of Islamic banking worldwide is that Islamic banking deals with real economy. There is no speculation.
Askalan said Al Yusr unit is being headed by Azmat Rafique who comes with rich experience in Islamic banking within the GCC and Pakistan. He is an experienced professional and well acknowledged in the field of Islamic banking and finance.
According to Rafique, Al Yusr will give return on saving accounts and fixed deposits on a monthly basis and it will not be difficult for the bank because it boasts very sophisticated tools to calculate return over investment.
Rafique said until recently Bahrain was the leader in Islamic banking in the GCC, but since it is embroiled in a political crisis, Oman has the potential to emerge as a regional hub of Islamic banking.
In Islamic finance one cannot make money out of thin air. One’s dealings have to be tied to actual economic activity, like an asset or a service. For example, someone wants a loan to buy a house or some items for marriage. In that case al Yusr will buy those items and sell to the ‘borrower’ on deferred payment terms with a profit margin.
In Islamic banking, depositors are like partners — their money is invested, and they share in the profits or, theoretically, the losses that result, said Rafique.
Interest and speculation-free Islamic financial model is attracting worldwide attention not only for the huge business prospects but also for the stability that it provides. Islamic banks operate an interest-free system, in which depositors’ share the risk of investment and either partake of the resulting profits or bear part of the losses. On the whole, money invested in many diversified sectors makes profits.
One of the requirements in Islamic banking is for transactions to be backed by tangible assets, profit sharing, prohibition of interest (Riba), said the OAB Shariah Advisory Board members in their speeches. In a nutshell, Islamic banking and the peaceful country like Oman are suited to each other and one hopes Oman will emerge as a regional centre for Islamic banking and finance in near future.
— Pic by Huda al Bahri