Oman’s Islamic banking sector has evolved beyond being merely a growing segment of the Gulf country’s financial setup, as the sector’s focus now shifts on how effectively it can finance the assets, enterprises and infrastructure underpinning the “Vision 2040” diversification agenda.
In his key message delivered during the inaugural Islamic Finance Sustainability & ESG Forum, held on May 20 at Muscat’s Crowne Plaza Hotel, Hussain al Lawati, CEO of the Development Bank, stated that Islamic finance in Oman has transformed from a late entrant into a substantial component of the Sultanate’s banking system.
By the end of November 2025, Islamic banks and banking windows held assets worth approximately RO 9.3 billion (USD 24 billion), accounting for 19.4% of total banking assets. Islamic financing stood at RO 7.5 billion (USD 19.4 billion), representing 22% of Oman’s total banking credit and financing.
Al Lawati, while participating in a panel discussion titled “The Way Forward: The Role of Islamic Banking & Finance for Sustainable, ESG Finance Under Oman Vision 2040”, said, “The discussion around sustainable Islamic finance can often become too focused on frameworks and reporting. Those have their place, but the real test is what the finance does. Does it help a manufacturer buy better equipment? Does it reduce industrial waste? Does it support an asset that creates long-term value for Oman? That is where Islamic finance has a natural advantage because it stays close to the asset, the activity and the purpose of financing.”
The forum came at a time when sustainable Islamic finance continues to gain traction both in Oman and around the world. Global sustainable sukuk issuance reached USD 21.5 billion in 2025, marking a 38% increase from 2024, reflecting stronger investor appetite for Shariah-compliant instruments aligned with sustainability goals.
Al Lawati also stressed that the challenge for the Islamic banking industry lies not only in the availability of finance but also in the quality of projects entering the market.