MUSCAT — Oman’s first Islamic bank, Bank Nizwa and Sohar Islamic, have entered into a Wakala agreement for Interbank placement activities between the two banks. The signing of the agreement signals that the Islamic banks in the Sultanate, are trying to develop the local Islamic interbank market, which will boost the overall development of the Omani Islamic banking industry. The Wakala Agreement signed between the two banks is Sharia compliant and follows the AAOIFI (“Accounting and Auditing Organization for Islamic Financial Institutions”) standards. Thus the same format can also be used between international Islamic banks for their interbank liquidity management transactions. Bank Nizwa and Sohar Islamic are committed towards developing the local Islamic interbank market and hope that this will spur others to sign similar agreements with each other.
Speaking at the signing ceremony, Dr Jamil Jaroudi, CEO of Bank Nizwa commented, “Being the first Islamic Bank in Oman, we are duty bound not only to serve our shareholders but also to all the stakeholders in Islamic finance. That means we also have to include developing the Islamic banking industry as a whole as part of our responsibilities and we are indeed happy to join hands with Sohar Islamic towards contributing to that objective.” Dr Mohamed bin Abdulaziz Kalmoor, CEO, Sohar Islamic commented on the partnership between the two banks, “We are delighted to sign the ‘Wakala Agreement’ with Bank Nizwa. This agreement will no doubt be the beginning of a long and fruitful relationship between the two parties. It shows our commitment towards operating a vibrant Islamic banking window which will strengthen the local Islamic inter-bank market. We will do so by being a prominent player in its development while ensuring that our ultimate objective of Shariah-compliance is achieved at the same time.”
Bank Nizwa has been striving through its partnership and products to introduce Islamic Banking best practises into Oman. Oman being a new Islamic market, it becomes important to set in place the necessary infrastructure such as the Wakala Agreement for Islamic Banks and Windows to engage with each other more effectively.
**This article by Bader Al Hashami was published in Oman Daily Observer. Read the original article here.