Muscat, The Central Bank of Oman (CBO) issued a number of directives to all licensed banks and FLCs operating in the Sultanate including a package of incentives and precautionary measures that are expected to provide additional available liquidity in a range of RO 8 billion, to overcome the prevailing economic conditions.

The incentive measures included lowering the Capital Conservation Buffers (CCB) by 50 percent from 2.5 percent to 1.25 percent, increasing the Lending Ratio/ Financing Ratio by 5 percent from 87.5 percent to 92.5 percent and to

utilize the additional scope provided for lending/financing to productive sector of the economy including healthcare services, travel and tourism.

CBO also directed to accept requests for deferment of loan instalments/ interest/ profit for affected borrowers particularly SMEs with immediate effect for the coming 6 months without adversely impacting the risk classification of such loans, in addition to deferring the risk classification of loans pertaining to government projects for the period of 6 months and considering reducing existing fees related to various banking services and to abstain from introducing new ones during year 2020.

CBO also issued a circular regarding reduction of the interest rate on Repo operations by 75 basis points to 0.50 percent, and increase in the tenor of Repo operations up to a maximum period of 3 months, reduction of the interest rate on discounting of Government Treasury Bills by 100 basis points to 1.00 percent and reduction of the interest rate on Foreign Currency SWAP operations by 50 basis points, and increase in the tenor of SWAP facility up to a maximum period of 6 months.

Furthermore, Rediscounting of Commercial Papers as follows:

A) Reduction of the interest rate on

rediscounting of a Bill of Exchange and

Promissory Note (with 2 signatures), by 100

basis points to 3.00 percent.

B) Reduction of the interest rate on

rediscounting of a Promissory Note with

Acceptable Guarantee, by 100 basis points to

3.25 percent.

C) Reduction of the interest rate on

rediscounting of a Promissory Note

accompanied by Trust Receipt, by 125 basis

points to 3.50 percent.

The procedures that were circulated to the banking sector indicated that there should be a high readiness to deal with any increase in the demand for financial and banking services, and encouraging customers to take advantage of electronic services and inform them quickly of any changes in the availability of services.

The circulars stressed on banks, exchange companies and finance companies to remain in a state of alert about cybersecurity, assessing potential risks, setting controls to mitigate risks, working on awareness campaigns for customers, and taking emergency backup steps if needed. CBO also stressed the need to take the necessary precautions and measures to ensure the continuity of major operations.

CBO calls on banks, exchange companies and licensed finance companies in the Sultanate to take the necessary precautions and provide appropriate sterilization methods at service outlets, and automatic teller and deposit machines and follow up on this continuously.

Source: Oman News Agency