Central Bank of Oman Opens Licensing for Digital Banks, Ushering in a New Era of Financial Innovation

Muscat : The Central Bank of Oman (CBO) has officially launched a licensing framework for digital banks, marking a significant step toward modernizing the Sultanate’s financial services sector. In its announcement, the CBO stated, “Digital banking is the future, and the Sultanate of Oman is at the forefront of this transformation.”

What Are Digital Banks?
Digital banks are defined as institutions offering all banking products and services exclusively through digital platforms—eliminating the need for traditional branches or paper-based processes. These banks leverage advanced financial technologies to reduce operational costs, streamline services, and deliver innovative, 24/7 solutions across the financial ecosystem.

Licensing Categories and Capital Requirements
Under the new framework—based on Article 9 of the Banking Law and Articles 8 and 17 of the CBO Statute—digital banking licenses are divided into two categories:

• Category 1 (Full License): Requires a minimum paid-up capital of RO 30 million for a locally incorporated joint-stock company.
• Category 2 (Restricted License): Requires a minimum paid-up capital of RO 10 million for a similar legal structure.

For branches of foreign digital banks, capital requirements will be determined by the CBO Governor.

Ownership and Eligibility Criteria
Locally incorporated digital banks must follow shareholding restrictions similar to those in traditional banking. Applicants are expected to have robust financial industry experience, technological proficiency, and sufficient capital. Board members, senior executives, and ultimate beneficial owners must meet the CBO’s “fit and proper” standards.

Foreign digital banks seeking to open branches in Oman must obtain approval from their home supervisory authorities and commit to joint oversight with the CBO.

Business Plan and IT Requirements
Applicants must submit a detailed business plan that includes:

• A financial inclusion strategy
• Market research and projections
• Digital service and channel plans
• Comprehensive IT architecture, data protection, and cybersecurity measures
• Business continuity plans
• Risk management strategies
• Human capital acquisition plans
• Customer service protocols
• A roadmap for adopting technologies like AI, big data, and open banking

Operational Presence and Customer Support
Digital banks must maintain a physical presence in Oman. Locally incorporated entities must establish a head office, while foreign branches require a registered office. Although customer-facing branches are not allowed, digital banks may set up physical offices for administrative functions or customer support, subject to CBO standards.

Any plan to use banking agents also requires prior written approval from the CBO.

Mandatory Exit Strategy
A key component of the application is a five-year Exit Plan. This plan must outline potential triggers for business wind-down (e.g., capital or liquidity challenges), strategies for managing customer funds, orderly exit procedures, and funding sources. This ensures minimal disruption to customers and the broader financial system in case of closure.

Regulatory Oversight and Deadlines
The CBO retains the right to request further information, reject incomplete or non-compliant applications, or revoke licenses for false disclosures. Completed applications will be processed within 90 days, and approved applicants must finalize setup within one year of receiving initial approval.