Muscat: The Central Bank of Oman (CBO) has highlighted that the promulgation of Royal decree No. (47/2024) under the Law on Protection of Bank Deposits plays a crucial role in sustaining a healthy and robust financial sector.
This legislation is designed to safeguard depositors' interests in the event of a bank's default, which is one of the primary functions of the law. It is recognized as an essential component of the financial safety framework within the Sultanate of Oman.
The primary objective of this law is to protect the interests of "small depositors," who are deemed the most vulnerable in the event of a bank failure. It achieves this by establishing a swift and effective compensation system, thereby enhancing confidence in the banking system.
The law's main objectives encompass providing comprehensive protection for members' deposits to encourage savings, bolstering confidence in the financial stability of the banking sector in Oman, and mitigating the impact of systemic risks within the banking industry.
The legislation is structured into 31 articles, with its core provisions focusing on the establishment of two independent funds: the Takaful Fund for the Protection of Deposits with Licensed Islamic Institutions, and the Insurance Fund for the Protection of Deposits with Licensed Conventional Institutions.
Furthermore, the law stipulates that the current compensation amount is set at OMR20,000 as a maximum for deposits exceeding OMR20,000. Conversely, deposits of OMR20,000 or less are fully compensated.
Additionally, the law clarifies that in the case of a depositor holding multiple accounts with a defaulting bank, the total amount deposited across all eligible accounts will be aggregated to determine the compensation amount. Consequently, all deposits eligible for coverage by the system for a single depositor across various banks will be treated independently, ensuring that the depositor receives a maximum compensation of OMR20,000 from each bank.
