Wednesday 16 / October / 2024
Muscat: The Central Bank of Oman (CBO) pointed out that the issuance of Royal decree No. (47/2024) promulgating the Law on Protection of Bank Deposits contributes to maintaining a healthy and robust financial sector.
The law is based on protecting deposits in the event of the default of one of the banks or financial institutions licensed by the Central Bank of Oman to receive deposits. The Law is considered an integral part of the financial safety network in the Sultanate of Oman.
The Law aims to protect the interests of “small depositors”, who are the most vulnerable in the event of bank failure, by establishing a fast-track and effective compensation system, and boosting confidence in the banking system.
The main objectives of protecting bank deposits include: providing a comprehensive protection cover on members’ deposits to encourage savings; enhancing confidence in the soundness of the financial position of the banking sector in the Sultanate of Oman and minimizing the effects of systemic risks in the banking sector.
The Law consists of (31) Articles. Its main provisions are the establishment of two independent funds, namely the Takaful Fund for the Protection of Deposits with Licensed Islamic Institutions, and the Insurance Fund for the Protection of the Deposits with Licensed Conventional Institutions.
The law also sets the current compensation amount at OMR20,000 as a maximum for eligible deposits whose value exceeds OMR20,000. Meanwhile, deposits of OMR20,000 or less are fully compensated.
In addition, the Law states that if a depositor has several accounts with the same defaulting bank, the amounts deposited to him/her in all accounts eligible for coverage by the system are collected to calculate the compensation amount. All deposits eligible for coverage by the system for the same depositor in several banks will be dealt with independently, so that the depositor is entitled to receive a maximum of OMR20,000 from each bank.
