MONEY BANKING AND

FINANCE

Ali
  
 Table of Contents
Page #

Table of Contents
The brief introduction of financial system in Oman 2
risk management theory in financial and banking system 4
financial system and banking services when economic growth is booming 6
Financial institutions to manage business risks arising from financial markets 8
Audit firms 9
Financial action task force 10
IFRS 11
conclusion 12
References ……………………………………………………………………………………..13

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The brief introduction of financial system in Oman
There are numerous foundations those structure monetary systems of Oman. The noticeable
foundations which make financial system of Oman are below

1) Regular bank known as conventional banks

2) Insurance institutes
3) Islamic banking system
4) Leasing structure
5) Brokers of equity class
6) Financial consultants
7) Money exchangers
8) Investment and portfolio management firms
9) Fund managers e.g. pension and insurance

in 2012 when Islamic banking was given approval without precedent for Oman and from that
point forward this type of banking has left conventional by the fast development rate. All
ordinary and Islamic banks alongside renting and financing organizations goes under the
checking of national bank of Oman and they need to take permit from national bank of Oman to
begin banking activities in the nation. The strategic objective of national bank of Oman is to
make a supportable situation for banking and financing environment of Oman so these
establishments can fuel the monetary exercises in the nation which will at last reason trigger
financial development. National bank of Oman was set up by unique law and it did monetary
observing of banks and different establishments with the assistance of tight guideline since its
beginning. Oman banking segment demonstrated it quality in most recent couple of years and
posted development of 6.4% all in all by Islamic and traditional banking in 2018. The
development rate is higher for Islamic financial system then the traditional banking and one
reason is that Islamic banking was presented in Oman late then different nations in Arabic
peninsula. National bank had tight financing rates strategy in 2018 yet credit stream to various
industries like assembling and transport was significant. It is significant for banking area of any
economy to have better quality credits in its portfolio and this was a lot of clear a year ago that

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Omani financial sector had greater quality loans then past. The national bank of Oman attempted
to minimize dangers of money related markets by taking various steps a year ago. The point
behind the guideline by national bank of Oman was that foundations develop without affecting
the general financial development of the economy. Since the beginning of Islamic banking
system of Oman these banks have played immense role to fill the monetary hole of Oman by
making more occupations, openings, rivalry and fuel to business condition. The effectiveness of
finance sector has been expanded with acceptance of Islamic bank and right now there are 76
Islamic banking branches Oman. The financing by Islamic bank in most recent years has been
expanded by 58.1% which is pretty high than normal banking. The assets of Islamic bank in
Oman saw growth of 37%. Of all assets which banks in Oman held 13% were from Islamic
banks. It has been extreme point of national bank of Oman to give more presentation and
simplicity to Islamic banking because of its sharia importance and extreme growth. Presently the
objective is to find a way to give this sector long term growth. For this national bank of Oman
has lifted all restrictions from Islamic bank with respect to individual and real estate lending so
they can have better portfolio. One of the more explanation behind every one of these guidelines
and activity was to lift sharia complaint investment in economy.

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Risk management theory in financial and banking system

Now we need to understand the general condition of Oman banking and financial industry to
understand the risk management theory. Why this is necessary is because to evaluate a specific
economy and condition of economy that you are ready to invest in that industry or not you need
to check the ground realities of that economy and industry.

At this point when we take a look at the general circumstance of banking of Oman then we can
say that it looks encouraging despite the fact that worldwide economies saw low growth because
of fall in crude oil prices. The acceptance of new bookkeeping guidelines in Oman was
additionally exceptionally critical. in 2018 when IFRS 9 was actualized which manages
impairments in loan. Still the increase in assets of top eight banks n Oman was more then seven
percent while the figure of increase in net profit was 11.5% in 2018. Another incredible activity
in banking was execution of CIAM which is otherwise called client identity and access
management system. Some salient features of CIAM are listed below

1) connection with clients through virtualization

2) customer needs identification
3) security from online frauds
4) learning from machine systems

Why investor will think about FATF assessment regarding Oman is because it is important when
you think about investing in thr economy you need to evaluate all factors. Risk management
theory tells us about this.

Risk management in banking services and financial system

Islamic banking is a structure that is solid with the principles of Sharia and is practical
application through the improvement of Islamic money related issues. There are two
essential principles for Islamic banking are the equivalent offer in benefit and loss. It is
forbidden in Islam that you exploit someone by taking interest on loan that the lending
person cannot give In given time. Interest payment shakes the foundations of society in
many ways. interest collection isn't permitted under Islamic law. Sharia denies the fixed
or portion interest. In 20 century different Islamic banks formed to apply these principles
to private or semiprivate business establishments inside the Muslim social orders. It now
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 observed that many Omanis also prefer Islamic banking accounts and investment
products. It’s not the case the Islamic banks don’t work for sake of profit but the thing is
that they work differently. They aim in Islamic banking is not to exploit anyone but to
facilitate the loan taker. In Islamic banking the amount the user need to pay in form of
interest is decided in the start and it will not be increased whatever happens even the rate
increased by central bank of Oman the user will pay that fixed amount that was decided
in the start of the loan.
Quite a while since the start of the worldwide economic crisis which began in 2008, the
overall financial industry has recovered altogether, posting more valuable capital
adequacy extents and continuously smoothed out liquidity moreover, risk minimizing
strategies became possible and it is the most important factor after worldwide crisis of
2008. overall Islamic banking sector, working close by regular banking. And its not the
se that Islamic banking sector never faced challenges. It has face many challenges along
with rapid growth.

The overall financial sector, following its successful season of 2017, foresees the accompanying
course of action as weaknesses are rising which will have a couple of repercussions for the
monetary markets. Aside from the more broad political aspects analyzed more than, a huge point
is the pace of the consistent normalization of loan fees as strict guidelines can disturbs financial
sector.

Meanwhile, the money related markets are moreover exposed against unusual developments in
the shares and loan market, as we can see in the case of covid19 that how it affected almost every
equity market of the world which tanked in fear and it was never in control of every one nor
anyone saw it coming in 2019.

A particular possibility here is the decline in quality of credit, which has experienced a couple of
improvements in 2017 due to overall improving costs. Amidst stresses of business war among
United states and china in 2018, monetary markets are confronting extraordinary dangers. As we
know that crude oil costs have been gone down because of moderate worldwide monetary
development and less consumption from US the oil delivering nations in gulf are confronting

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spending shortfalls as well so these Islamic nations like Oman will invest less in Islamic products
too as they will not have extra cash now. and now after covid19 it seems more predictable that
deficits of organizations gone all time high. The administration of every risk is significant for
development of Islamic banking since that is the means by which the Islamic banking will
contend with ordinary banking. Every single Islamic bank have their own strategies to tackle the
risk involved in the market whether it is market risk or liquidity risk or credit risk. they make
their own plan to tackle all types of risk.

More often than not the risk of Islamic banks will be very like traditional banks however there
will be not many distinction too like separated structure previously mentioned risks the Islamic
banks will have sharia laws applied.

chance too in light of the fact that they are selling a sharia based item so they need to observe the
basic principle of that. In Islamic financial system we can't state that even non exclusive risk are
very clear and if we are looking at credit for assets, for that we have to comprehend the idea of
mudarbaha and ijrah. At times Islamic banks likewise face uprooted business risk where they
face strain to pay more benefit then what they have earned. When risk has been distinguishes it is
obligation of officials to gauge the chance of misfortunes with all things considered. For this
composite risk list is most regularly utilized technique. There is another method which is known
as matrix of risk which can be utilized to decide the level of the risk. First of all banks need to
avoid the risk and then collectively share it with clients.

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financial system and banking services when economic growth is
booming
In this section we are going to look at factors that how financial and banking system should react
and work when economic growth is good.

Money related improvement is seen as the indispensable objective of countries in this century.
Regardless, improvement system needs fundamental necessities in order to satisfy human energy
and that may occurs through financing opportunities and time. Exceptionally in less advanced
countries that are persevering through various financial issues, for instance, no jobs, low desires
for ordinary solaces, and expensive prices . Along these lines, these countries reliably hope to
keep up growth to construct their national compensation and to make greater work opportunities
to improve their living standard. Now it has been accepted globally that without banking sector
the growth of financial markets is impossible. Why banking sector is very vital for the economy
because that it directs money from savers to spenders in the economy. As the depositors deposit
money in the banks for the saving purpose and invest in different products to get return and
banks then give that money to different industries and projects which ultimately boost the
economy by creating different job opportunities. The loans to agricultural sector also helps to
grow the gdp of nation and the quality of lower class grows. Presently in the event that we talk
about finance services and banking in presence of economic boost then we can say that the most
f the money will flow to this sector as it is acting as intermediary and funds will flow through
them . At the point when oil costs will go up then the economies like Oman will have more cash
to put resources into Islamic bonds and eventually the this sector will develop at fast pace.

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The investing consistently develops when the financial circumstances are acceptable and the
greater part of the investments in economy consistently go through financial channels to go into
final result. Now if the question is that why islmaic banking industry rose then that is because
Islamic banks have pulled in gigantic investments from financial specialists in the midst of good
financial situations after crisis of 2008 which affected almost all economies in the world. As we
can take case of Oman that how it has accomplished the surprising development rate. Despite the
fact that the execution of new bookkeeping standard, for example, IFRS 9 was pivotal.

Financial institutions to manage business risks arising from

financial markets
Now when we talk about the national banks of any economy then this national or central bank
actually controls all banking and financial sector. As it makes policies for all conventional and
Islamic banks and it make environment for better business. National bank of Oman also played
huge role in success of banking sector and helped financial sector in many ways specially in
tackling the risk. Now we will discuss that how Omani national bank performs its functions for
the betterment of market and financial sector.

1) Create and directs cash related course of action to achieve a grouping of goals including
stable costs, growth and work.
2) Oversees and coordinates banks, financial and leasing companies and money exchange
companies. it also give license to these organizations to perform business in Oman
3) print and keep up cash in the market to keep up liquidity in the market.
4) It is personal bank for government and banks too like if government need banking
administration they will come to bank of Oman and if any bank need banking they will
likewise come to national bank of Oman.
5) Hold the cash of government and security credit of private and commercial banks
6) it works as guarantor of banks to general public by holding a proportion of assets of
commercial banks in shape of cash deposit from them in its accounts

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Identify four financial institutions

1) Audit firms
for the success of any company it is necessary that it has proper audit system and review
framework is performed by firms which watch financials of organizations so they can disclose
any misappropriation. As we saw in this report that how kpmg has gave a report about banking
of Oman so in the event that there was any issue with respect to banks which can hurt
organizations, at that point they would have examined it. Evaluation the Risk of Misstatement
and detection of fraud is responsibility of audit firms

2) International Financial Accounting Standard (IFRS)

IFRS are planned to convey consistency to accounting language, practices and decrees, and to
help associations and theorists choose trained fiscal assessments and decisions. IFRS Foundation
sets the standards to duty and capability to cash related markets. IFRS were set up to make a run
of the mill accounting language, so business and records can be grasped from association to
association and country to country. Associations and organizations benefit by IFRS in light of
the fact that people are continuously certain placing assets into an association if its vital
methodologies are direct and reliable.

3) Financial Action Task Force

The objectives of the FATF are to set rules and advance convincing execution of real, managerial
and operational measures for engaging illicit assessment evasion, war monger financing and
other related risks to the dependability of the worldwide cash related system. The FATF screens
the progression of its states in completing central measures, reviews illicit expense shirking and
activist financing frameworks and counter-measures, and advances the gathering and execution
of appropriate measures all around. In a joint exertion with different accomplices, the FATF
endeavors to perceive weaknesses with the purpose of protecting the overall cash related system
from misuse.

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 4) Commercial banks

Regarding banks and their role we already discussed that how they impact the economy by
keeping the report in the mind.

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Conclusion

In entire conversation we have examined that how Islamic finance has been emerging not too far
off and has beated all other in the Oman by posting development at pace of 14%. We likewise
talked about the dangers of Islamic banking and monetary frameworks and how they can be
decreased. We have discussed the distinction among regular and Islamic finance and how Islamic
financial framework has been so effective to beat the others. At last we discussed the various
foundations those can be useful to organizations for getting to the dangers of monetary markets.
More or less we can say that Islamic banking is fate of banking division and in one decade from
now it will surpass the traditional type of banking in each sense.

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References:

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Available at: http://www.omanbankingfinance.com/ [Accessed 24 Aug. 2020].
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[online] Available at: https://www.mondaq.com/financial-services/865294/omani-
banking-regulations [Accessed 24 Aug. 2020].
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https://corporatefinanceinstitute.com/resources/careers/companies/top-banks-in-oman/.
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