Finally, the dream of many Omanis has come true. They have demanded that Islamic Banking should be practiced in Oman. Such a demand will not only fulfill their financial needs, but also will give opportunities to people to understand Islamic Banking and compare it with conventional banking. Before getting to know the differences between Islamic Banking and conventional one it is advisable to know banking in general first.
Banking came into being since 1200 approximately and its practices were initially found in Italy. Banking is one of the most important pillars of the economy of a society. People use banks to borrow or deposit money to satisfy their needs as individuals or as families. Businesses need banks to conduct their transactions, to invest in or to get funding to grow their businesses. Banks accept deposits from people and businesses and use these deposits to further lend to other people and businesses or to invest in different fields to get good returns.
The banking sector serves a very important role in the development of a country’s economy. In Oman, banking sector has a long history, and so far contributions of the banking sector are evident in all fields and are well appreciated.
You must have heard about the recent changes in the banking sector. The ‘Islamic Banking’ has been brought into the country by the Central Bank of Oman. What will the impact of this be? What new changes will Islamic banking bring in terms of the economy, development, and innovation? The banking industry has become a very exciting place in last few months as there are various seminars, training courses, and conferences being held on Islamic banking in prestigious locations.
There are new banks like Bank Nizwa, and Bank Izz International which will be opening their doors to customers soon. The established conventional banks are also busy in opening Islamic windows. The employees are being chosen and trained for their new roles.
By now, the top management of the banks must have figured out the ‘strategy’ to be used for Islamic banking. They must have thought of internal policies for Islamic products and the computer systems to be used for their accounts.
This has also given an opportunity for training institutions to sell their Islamic banking knowledge to these banks. Islamic Banking experts have seen a gap in the expertise in the Omani market and are looking at Oman for employment opportunities in Islamic banking.
What is the Islamic banking going to provide its customers and in what manner will it be different from what is already available in the market? There are discussion and debates on this issue in the drawing rooms, in coffee shops, and in offices. These discussions and debates are essential for the success of Islamic banking in Oman.
The Islamic banks and the Islamic products like Sukuk, mudharaba, murabaha, etc., are new in the market, hence there are lots of questions in the minds of people such as; Will Islamic banks provide me a personal loan to get married? Will it be able to get an education loan to go for further studies? Will it provide loans for family health treatments? Will they provide loans to rebuild houses?
Though I am not an Islamic banker, in my opinion, Islamic banking crates a distinction between Halal and Haram in the field of banking. It is based on the Sharia law. It follows the “Quran” and “Sunna” to avoid Riba, which is not allowed in Islam. Quran teaches us not to take each other’s properties with injustice. Islamic banking makes an effort to apply justice and fairness in the finance sector.
Most researchers agree that the Islamic finance industry is growing very rapidly worldwide. Nevertheless, Islamic banking in Oman is a great challenge for the banking sector, the government, as well as the public. It is very important that deposits are brought in from customers in an Islamic way and the same funds are allocated as best guided by the principles of Islam.
Obviously, this is a great opportunity for the new Islamic banks as well as the conventional banks to come together and create an environment which should make all of us proud. It should be balanced with the Sharia Law, Central Bank of Oman’s guidelines, public demands and expectation, and the rule of the law, as a whole.