Tuesday 17 / December / 2024
Muscat: Oman Development Bank (ODB) has witnessed an increase in the number of applications for development loans, the bank’s chairman said in an exclusive interview.
ODB since its inception in 1997, has till date provided over 37,000 loans worth more than OMR1 billion. “It has been providing 4,000 loans with a value exceeding OMR70 million annually in revitalising the economy and in creating new job opportunities,” Eng. Muhammad Al-Ghassani, Chairman of the Board of Directors of ODB, told to Shabiba FM.
“This increase in the number applications has led to a delay in granting of loans. We are studying the issues relating to it and it is the bank’s endeavour to reduce the percentage of non-performing projects from 20 percent to 12 percent by the end of this year,” Eng. Muhammad Al-Ghassani said.
Elaborating about the main sectors that ODB has helped in financing, he said that, “The manufacturing sector accounted for the largest share of financing, receiving 32 percent of the lending portfolio, valued at over OMR59 million. The loans disbursed focused in localising industries in Oman and reducing foreign imports.
The other sectors financed by the bank included food security sector, tourism, education, logistics and mining because of their developmental impact in stimulating the economy.
He said that the government established a development bank for providing loans and financing to individuals and small and medium enterprises (SMEs), despite the risks and high cost of financing for such projects. “ODB is supported by the government and therefore they offer a lot of flexibility with regard to lending to SMEs and companies despite high risks and with lower benefits than any other commercial banks,” he added.
Regarding the loan ceiling being offered by the ODB, Eng. Muhammad Al-Ghassani said that previously the ceiling was at OMR1 million, but after the directives of His Majesty Sultan Haitham bin Tarik, the loan ceiling had been raised to OMR5 million.
Regarding the loan ceiling being offered by the ODB Engineer Muhammad Al-Ghassani said that previously the ceiling was at OMR1 million, but after the directives of His Majesty Sultan Haitham bin Tarik, the loan ceiling had been raised to OMR5 million.
Regarding the financial sustainability of the ODB, Engineer Muhammad Al-Ghassani said that the bank must sustain its business from its activities by itself. The bank has set its operational plan for the next three years until the year 2025, which is a very ambitious plan.
“It has set a target to achieve a growth rate of not less than 15 percent with the size of a lending portfolio expected to exceed OMR300 million by the end of 2025. The target set is a great challenge and requires a radical change in the way the bank operates,” he added.
He elaborated that the bank has strengthened its corporate governance and seeks to further raise the operational efficiency by restructuring the policies and procedures so that we can reduce the time period for obtaining approvals. Also we are working to improve the flexibility and to raise the quality of service provided to the customers.
“We are aiming to upgrade our customers’ satisfaction with the use of modern technologies and by reducing operating expenses along with launching new products. All of these initiatives will help the financial sustainability of the bank,” he added.
Regarding the procedures and the demand for more facilities and fewer conditions and guarantees, Eng. Muhammad Al-Ghassani said that the delay in lending now is due to several reasons, including the turnout of a large number of borrowers from the various branches of the banks. These 18 branches are distributed across the various governorates of the Sultanate.
The number of loan applications exceeded the bank’s expectation and thus there was a delay in the approvals issued. On the other hand, there may be sometimes delay because the bank is looking for those projects that are sustainable and do not falter. It is very important for us that any project funded by the Oman Development Bank not fail.
Engineer Muhammad Al-Ghassani revealed that there are cases that resort to the Oman Development Bank for the purpose of obtaining financing for a specific project, but then they use it for some other projects, and there are cases in the courts now for this reason. “This is one of the methods of misusing public money, and we discovered many small projects funded by the bank, but it does not exist on the ground, so it was the duty of the bank to be strict in the recent period to reduce such explicit violations,” he further added.
Regarding the zero interest rate in some types of financing offered by the ODB, Engineer Muhammad Al-Ghassani explained that there are products offered by the bank for job seekers without interest rates, and the loan amount starts from OMR5,000 and the upper limit is OMR15,000 for those who have a capital project in this field. Currently the bank has 6,000 borrowers who have availed this type of products offered by the bank and default rates are very few because of their commitment to these projects.
He added that the bank is about to launch new products for job seekers, in cooperation and partnership with the Ministry of Labour, and an announcement will be made in due course.
