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Central Bank of Oman chief emphasises importance of insurance coverage


Humoud bin Sangour Al Zadjali, the executive president of CBO, said that the Banking Deposit Insurance Scheme is designed to protect deposits in the event of banks failing to commit to their responsibilities under any circumstances. Photo: Times file

Muscat: Humoud bin Sangour Al Zadjali, the executive president of the Central Bank of Oman (CBO), said that in line with the keen devotion shown by the CBO with regard to the Banking Deposit Insurance Scheme (BDIS) and public awareness regarding the importance of this step in strengthening the country's financial stability, CBO has recently issued a special newspaper supplement in both Arabic and English to address the important subject of bank deposit insurance.

He said that the supplement was distributed with a number of local daily newspapers issued in Arabic and English for individuals, officials and groups interested in the Omani banking affairs, whether depositors or the public, to learn about the information contained therein.

Sangour also pointed out in the 'Foreword' of the latest issue of Al-Markazi magazine to the importance of deposit insurance in supporting financial stability and enhancing public confidence in the Sultanate's financial systems, explaining that deposit insurance schemes in any country are primarily designed to boost public confidence in the banking system whilst acting as an additional comfort within the 'safety net' functions of central banks.

He stressed that the main objectives of the BDIS at the central bank is to provide suitable insurance coverage for deposits of specific banks in the Sultanate to encourage public savings and enhance the public confidence in the financial system as well as minimise the impact of traditional risk in the banking sector.
In addition, this scheme is designed to protect deposits in the event of banks failing to commit to their responsibilities under any circumstances, which confirms the fact that the BDIS is an essential and important part of the financial safety net of any country.

He further said that the BDIS enhances financial stability through the banking regulations set by CBO together with the rules, circulars, periodic control and supervision procedures and other responsibilities assumed by CBO to insure and protect such deposits and prevent any chance of potential failure in Oman's banking operations as well as compensate depositors immediately, particularly 'small depositors' — in case of any bank failure — until their financial obligations are entirely settled.

CBO contribution
Sangour also referred to the initial contribution of OMR5 million made by CBO to the project alongside the same-amount contributions from member banks as the mainstay for protecting the BDIS in the Sultanate, which CBO is keen to develop in order to avoid any sudden financial crises or difficulties that banking institutions may be exposed to.

He assured that this banking step, among others, shall be of support in boosting confidence in the banking sector, creating further awareness on the safety of the industry, enhancing savings in the future and achieving greater development and prosperity to the nation.

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