Wednesday, June 25, 2008

The Oman Law Digest 2009 - INTEREST

Commercial Banks and other enterprises routinely charge interest. Periodic circulars are issued by Government on commercial interest rates. Pursuant to the Banking Law [RD 114/00], CBO has the power to regulate interest rates in banking transactions. CBO sets interest rates chargeable by banks. Omani courts have consistently upheld payment of interest in commercial suits. Number of laws and regulations, including Law of Commerce [RD 55/90], Banking Law [RD 114/00], Civil and Commercial Procedure Law [RD 29/02] and Law of Commercial Companies [RD 4/74], specifically refer to interest being chargeable and enforceable. Interest rates and currency hedging arrangements are recognised and commonly used in project financing in Oman. Forward transactions are permitted under Omani law provided they are not exclusively for speculative purposes. The MCI periodically issues a decision on the maximum interest rate chargeable for commercial loans.