The Central Bank of Oman (CBO) has ordered banks to make rigorous checks on customers with credit limits as part of the authorities' efforts to strengthen an Omani banking system weakened by poor performing loans.

With immediate effect, all licensed banks in Oman must obtain audited accounts from customers - corporate or individual - that have been extended credit limits aggregating

Omani Rial 250,000 (OMR250,000 - US$650,000) or more, and OMR500,000 (US$1.3 million) and above if credit is extended by more than one financial institution.

The order applies to banks providing letters of credit (L/Cs) as well as other facilities including overdrafts, loans and bank guarantees.

Penalties

The CBO has stressed that under no circumstances should banks extend credit facilities to customers who fail to submit audited accounts and has advised banks to use the Banks' Credit Statistical Bureau (BCSB) to identify customers required to submit financial information.

Credit facilities will be suspended for customers that have not complied with the new order to submit audited accounts by 31 March 2002. In addition, banks must forward to the CBO a list of customers that fail to comply with the order. Banks that fail to meet their obligations under the order may face what the CBO describes as "stern regulatory action".

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.