Central Bank of Oman

CIRCULAR IB | 3

Classification: General
Date: 7 July 2026

To: All local Licensed Banks operating in the Sultanate of Oman

Subject: Islamic Banking Windows Conversion and Transformation Framework

After Compliments,
Pursuant to the Banking Law promulgated by Royal Decree No. 2/2025, the Islamic Banking Regulations No. BM 56/4/2019, the Islamic Banking Regulatory Framework (IBRF) issued via circular no. IB1 dated December 18, 2012, and in furtherance of the strategic objectives of Oman Vision 2040, the Central Bank of Oman (CBO) hereby issues the attached Islamic Banking Windows Conversion and Transformation Framework ("the Framework").

The Framework establishes the regulatory roadmap for the orderly transformation of the Islamic banking sector from the existing Islamic Banking Window model to a sector comprising of fully fledged Islamic Banks.

The Framework seeks to:

1. Facilitate the orderly and phased discontinuation of the model of Islamic Banking Window of the Conventional Banks to ensure the service continuity, protection of depositors and customers and to maintain the public and investors' trust, provided to complete the transformation by December 31st, 2030.
2. Promote the establishment of fully independent Islamic banking institutions operating under robust governance and Shari'a compliance arrangements.
3. Enhance transparency, market discipline, and public participation through listing requirements in Muscat Stock Exchange.
4. Ensure complete separation between conventional and Islamic Banks.
5. Support the development of a resilient, competitive, and sustainable Islamic banking sector in the Sultanate of Oman.

Accordingly, all local Licensed Banks are required to:
a) Review the requirements of the Framework and assess the most appropriate transformation pathway available to them. b) Submit to the Central Bank of Oman, not later than December 31st 2026, a Board-approved Window Transformation Roadmap (WTR) setting out:
1. The preferred transformation pathway.
2. Strategic rationale for the selected pathway.
3. High-level implementation timeline.
4. Preliminary capital and governance arrangements.
5. Key operational and technological separation milestones.
c) Ensure that all planning, governance, and implementation activities are undertaken in accordance with the Framework and any subsequent guidance, instructions, circulars, circular letters, or directives issued by the Central Bank of Oman.

d) Designate a representative from senior management as the primary point of contact for engagement with the Central Bank of Oman.

For any clarification regarding the requirements of this Framework, you may contact the Islamic Banking Directorate at the Central Bank of Oman on the following email address:
CFSBS-IB-Deputy@cbo.gov.om

The Framework shall come into force on the date of issuance of this Circular.

Best Regards,

[Signature]
Ahmed Al Musalmi
The Governor

Encl:

1. Islamic Banking Windows Conversion and Transformation Framework

CFSBS-IB-Deputy@cbo.gov.om