Oman has enacted a comprehensive new Banking Law through Royal Decree No. 2/2025, which took effect in January 2025 and formally repeals the banking legislation that had governed the sector since 2000. The new law substantially increases the penalty regime for regulatory breaches, broadens the supervisory authority of the Central Bank of Oman across a wider range of financial entities, and introduces updated provisions addressing consumer protection, capital requirements, and the governance of institutions operating in the Sultanate. The reform represents the most far-reaching overhaul of Oman's banking legal framework in a quarter of a century.
The repeal of the 2000 banking law ends a regulatory framework that predated the widespread adoption of digital financial services, the emergence of fintech operators, and the significant deepening of Gulf capital markets that has occurred over the past two decades. The new legislation is explicitly designed to reflect the structural changes that have reshaped banking and finance in Oman and the broader Gulf Cooperation Council region, including higher international expectations around prudential standards, conduct obligations, and the governance of technology-driven financial service providers that did not exist when the previous law was drafted.
ENHANCED PENALTIES AND ENFORCEMENT POWERS
Under Royal Decree No. 2/2025, banks found in violation of the law face fines of up to OMR 200,000, equivalent to approximately $519,478, a substantial increase relative to the penalty ceilings in the 2000 legislation. Other financial institutions subject to the law face penalties of up to OMR 50,000, or around $129,869. The new law also introduces daily fines of between OMR 1,000 and OMR 5,000 for the unauthorised use of banking-related terms or designations, a provision targeting entities that seek to market themselves using protected terminology without holding the appropriate licence. Conducting unlicensed banking activity carries a custodial sentence of up to three years under the new framework.
Beyond the penalty enhancements, the CBO's regulatory scope has been extended to encompass a broader range of financial entities, including those that have emerged in the gaps of the previous legislative framework and that were not clearly captured by the 2000 law's definitions. The new legislation also strengthens consumer protection requirements, placing greater explicit obligations on licensed banks regarding product disclosure, complaints handling procedures, and the fair treatment of retail customers. The combination of higher penalties and wider regulatory coverage is intended to create stronger deterrence across the financial sector and to reduce ambiguity about which entities are subject to CBO oversight.
DIGITAL BANK FRAMEWORK AND MINIMUM CAPITAL REQUIREMENTS
Alongside the enactment of the new Banking Law, the Central Bank of Oman introduced a dedicated regulatory framework for digital banks, which was approved in December 2024. The framework establishes a minimum capital requirement of OMR 40 million for locally incorporated digital banks seeking a licence to operate in Oman. The framework acknowledges the growing interest from investors and technology-focused financial services groups in establishing branchless, app-based banking operations in the Gulf, and provides a defined and transparent licensing pathway for such entities under direct CBO supervision.
The combination of Royal Decree No. 2/2025 and the digital bank framework positions the Central Bank of Oman as one of the more proactive regulatory reformers among Gulf central banks at the outset of 2025. Existing licensed commercial and Islamic banks operating in Oman will need to review their internal compliance frameworks, governance arrangements, and capital positions against the requirements of the new law, while prospective digital bank applicants can now engage with the CBO on the basis of a formally published regulatory framework. These developments are expected to influence the pace and character of both market consolidation and new entry in Oman's financial sector over the coming years.