CBO urges banks to meet needs of underserved areas of Oman

KEY MESSAGE: ”Providing reasonable and non-discriminatory opportunities to all, and the under-privileged/deprived in particular, is a logical, fair and non-debatable compulsion”

The Central Bank of Oman (CBO) has made it clear to commercial banks operating in the Sultanate that they have an obligation to extend banking services to unserved and underserved communities and neighbourhoods in line with the government’s drive in support of financial inclusion.

In a circular issued last week, the apex bank sought to remind all banks that their licenses to engage in banking activities require them to, among other things, “cater to the economic needs of the community to be served”.

“The CBO has, accordingly, the power and responsibility to ensure that banks conform to the basis on which they have been given the licenses and discharge their responsibilities,” warned Tahir bin Salim al Amri (pictured), Executive President.

According to the CBO circular, financial inclusion requires banks to make active and concerted efforts to “bring one and all into the formal organised financial fold, so as to benefit them, the financial sector and society and economy at large”.

A key goal, it stressed, is to enable individuals and businesses to gain access to affordable financial products and services that “meet their needs”, and are delivered in a responsible and sustainable way. Providing reasonable and non-discriminatory opportunities to all, and the under-privileged/ deprived in particular, is a “logical, fair and non-debatable compulsion,” the apex bank emphasised.

In support of its financial inclusion efforts, the Central Bank noted that it had adopted a number of measures to help banks extend services to unserved and underserved areas. Besides introducing diverse payment system channels, the CBO has liberalised branch licensing policy, authorised Islamic banking, introduced deposit insurance schemes, and progressively deregulated approval policies governing electronic products and services, it said.

In addition, the CBO has placed much emphasis on SME finance/ development, the opening of ’no-frills’ bank accounts, fee waivers for low salary and pension recipients, suitable facilitations for the blind and special needs categories, risk-based simplified Know Your Customer (KYC) forms, and grievance redressal and protection measures. All of these initiatives, it said, were aimed at encouraging and empowering banks to enable wider access to their services.

Measures that banks can consider to help further financial inclusion include the establishment of branches in remote areas, installation of ATMS, cash deposit machines (CDMS), onsite facilities, mobile banking units, phone and Internet banking, and so on.

Banks, the Central Bank further pointed out, are ideally positioned to advance financial inclusion. “Banks live in the midst of people and survive because of them. It is but fair that they reciprocate, availing an opportunity to give back in a very useful way. Financial inclusion should be an important objective of articulation of corporate social responsibilities,” it added.