Islamic Banking is commercial activity that is compatible with Islamic Sharia (Fiqh Al Muamalaat). The most important objective of Islamic banking is to promote honesty, justice and fairness in running business.
Sohar Islamic is the window for Islamic banking services in Bank Sohar; which is responsible for developing Islamic banking products offered to customers looking for Islamic banking product and services.
Sohar Islamic was founded in 2013 and started its operation on 13/05/2013 through its first branch in the city of Sohar at Falaj Al Qabail. It currently consists of a network of 8 branches and its headquarters are in Muscat (Ghala). The remaining branches are in Sohar, Nizwa, Salalah, Al Koudh, Al Mabilah, Al Ghubrah, Barka, We would like to expand to all the states and governorates of the Sultanate.
The work of Sohar Islamic is under constant supervision of its Sharia Supervisory Board as well as the bank’s Internal Sharia Reviewer, to ensure that all banking services are carried out in accordance with Islamic Law.
The Sharia Supervisory Board work independently and monitor all the banking operations and continuously oversee the development of all Islamic banking services.
Sharia means the path based on principles revealed from Allah which are included in the Quran and Sunnah (the words, actions or affirmation of the Prophet Mohammed peace be upon him). These principles govern and regulate different aspects of life in society to preserve the five life necessities which are: Religion, Self, Mind, Progeny and Wealth as well as taking care of the renewal of hardship where necessary such as in lending, Murabaha, Mudharaba, Musharaka, Salam, Wakala and other transactions that people carry out. Hence the Sharia is a complete and adequate solution for all that may be need by humans in all times and places.
The Sharia is derived from the following four sources:
Fatwa is the opinion of a person or a group of people qualified to issue judgment on the sources of Sharia mentioned above.
The most important difference is the prohibition of Riba (interest), ambiguity and injustice in conducting commercial transactions. Islamic banking activity must be compatible with the principles of Islamic Sharia and avoid the prohibition of immoral activities such as gambling and alcohol, etc.
Sharia Supervision is the management’s endeavour in the Islamic bank to ensure that all transactions carried out by the institution are compliant with the rules of the Sharia.
It is an independent body of specialized jurists, experts in Islamic jurisprudence and jurisprudence of commercial transactions. They are responsible for directing, advising, and supervising the activities of Islamic financial institutions, in order to ensure compliance with the rules and principles of Islamic Sharia. The fatwas and laws of the Sharia Supervisory Board must be followed by Islamic financial institutions.
Sharia scholars have discussed this issue and allowed traditional financial institutions to offer Islamic products / services, on the condition that the Islamic assets / liabilities / revenues and expenses of the Bank's business, accounts and activities are fully segregated and supervised by a Sharia Supervisory Board. Sohar Islamic has appointed a Sharia Supervisory Board and established a special department to manage the business and monitor the Bank’s operations to meet the terms of these requirements. A section for internal sharia audit has been setup and employees have been given specialized training and certified in the field of Islamic banking products and services.
All products and services provided by Sohar Islamic have been approved by the Sharia Supervisory Board, which includes leading Sharia scholars at international and local level. The Sharia Supervisory Board has prepared fatwas for each product before it is available to customers, and customers have the right to review any of these fatwas through the bank’s relations sharia officer or through the website.
Muslims are increasingly looking for financial products that are compatible with their religious beliefs. Bank Sohar understands the needs of the local communities. Sohar Islamic has responded to the desire of Muslim customers who are looking for Islamic products and services that are completely separate from the normal products and services of the Bank. It is also a strict requirement of the Central Bank of Oman.
At Sohar Islamic, we always seek to provide financial solutions that meet the needs of our customers. And Islamic banking offers solutions that combine our financial expertise with your own values. Customers can now enjoy a unique banking experience without compromising Islamic principles.
Yes, all products and services provided by Sohar Islamic have been approved by the Sharia Supervisory Board. Furthermore, we have an Internal Sharia Reviewer at the bank who reviews transactions on behalf of the Sharia board to ensure that all the commercial activities of Sohar Islamic are not in conflict with the provisions of Sharia law.
The Sharia Supervisory Board agreed that Sohar Islamic will use the capital from Bank Sohar as a Qard Hasan for Sharia-compliant financing, with funds being used only in Islamic assets. In our case, the capital from Bank Sohar is given as a Qard Hasan to help strengthen the concept of Islamic banking and help Muslims across the Sultanate to meet their financial needs in accordance with the principles of Islamic Sharia. It is a well-thought-out view of the Sharia Supervisory Board at Sohar Islamic, that Sohar Islamic products are continuously compliant with Sharia.
Riba is the payment or interest on loans or deposits for any amount large or small. Riba is prohibited by the Quran and Sunnah, regardless of whether a loan is taken for the purpose of consumption or business. Moreover, in today’s business, Riba comes in other forms such as the penalty imposed on delay of a debt repayment, the discounting of commercial paper, the sale of debt and other receivables.
Islam aims at the administration of justice between the financier and the owner of the project: the financier should not receive any benefit without taking any action or risk. Islam does not recognize money as a commodity of intrinsic value and thus cannot guarantee profit returns that emanate from a loan. Sharia requires funding to be accompanied by work and management to justify returns.
The economic and social objectives of the Islamic economy lies outside the functions of the Sharia Supervisory Board, but provides the framework that enables participants to understand the Islamic rationale and avoid prohibitions such as Riba.
Since its inception, Islamic banks have adhered to the provisions of Islamic Sharia in all their banking and investment transactions. Therefore, there is a need for the existence of a Sharia Compliance Department in Islamic banks. The main task of Sharia supervision is to ensure the implementation of fatwas and rulings issued by the Sharia Supervisory Board and to ensure that execution is in line with the fatwas. The Sharia Compliance Department should submit its reports and observations to the Sharia Supervisory Board and to the Bank’s management. All praises to Allah Almighty that Sohar Islamic is committed to these principles and seeks to implement all transactions and financial activities in light of the Quran and Sunnah.
It is true that Islamic banks compete with traditional banks, however Islamic banks use contracts and terms that are permissible in the Sharia. The fact that financially, our objectives are similar to the objectives of conventional banks, but does not mean that we copy them in their transactions.
Here are the main differences between Sohar Islamic and any conventional bank:
In terms of role:
Traditional Bank: Acts as an intermediary between savers / depositors and investors.
Sohar Islamic: Does not merely act as an intermediary, but acts either as a buyer, seller or investor
In terms of money:
Traditional bank: Money is a commodity that is sold or leased.
Sohar Islamic: Money is a medium of exchange rather than a commodity.
In terms of medium of exchange
Traditional Bank: Borrowing and lending at interest.
Sohar Islamic: Financing on the basis of risk / reward and receiving a return on the basis of the obligations it undertakes.
In terms of funding
Traditional Bank: Lends on interest.
Sohar Islamic: Financings are given on the principle of profit and loss.
The interest system gives a return to the depositor regardless of any activity with the deposit. In the profit system, the deposit is invested by Sohar Islamic on behalf of the customer and the shareholders. The return is "profit" distributed between depositors and the bank. Commercial banks grant loans against fixed interest without taking any risk, while Islamic banks bear risks with the customer and share profit and loss.
Sohar Islamic offers a series of financial solutions aimed at individuals and investors such as: current account service, savings accounts, term deposits, vehicle financing, mortgage finance, personal finance, commodity finance, etc.
Sohar Islamic offers a series of financial solutions targeting companies and institutions and High Net Worth investors. Examples include short term project finance, long term project financing, documentary credit. Sohar Islamic Bank has "Relationship Managers" who design products and services that meet the needs and demands of companies. Sohar Islamic by it financing of companies, caters to customers’ needs and competes in the local market.
Sohar Islamic invests funds deposited in accordance with the requirements of Islamic law, and every month, when profits are realized, they are distributed and deposited in saving accounts in the same currency.
There are several fundamental differences. Commercial banks, you would borrow money to buy a home and you would have to return the money after a period of a few years and pay interest on the money borrowed. This in the Sharia is known as Riba. In Islamic financing, Sohar Islamic buys the house from the owner, rents it to you and you would pay the rent in installments as agreed throughout the ijara tenor.
There are a number of types of sale contract in Islamic law. Murabaha is one of them. The seller must tell the buyer about the actual cost of the asset or commodity and the margin of profit to be added to the price, and profit margin can either be a percentage of the cost of the commodity or a lump sum as agreed between the buyer and seller at the time of conclusion of the Murabaha sale agreement.
In Murabaha, the bank is the seller and the customer is the buyer. Based on the promise of the customer, the bank buys the commodity and sells it at a fixed price to the customer. Islamic banks, through Murabaha can finance cars, goods, land or buildings.
The Mudaraba is a form of participation in an investment. In a Mudaraba contract, the bank, in its capacity as the investor, finances the customer. The bank finances the customer on a specific project after receiving a feasibility study. When profits occur as expected in the feasibility study, they are shared at the ration agreed upon between the parties.
Unlike a conventional bank which gives a fixed return on deposits, an Islamic Bank invests a depositor’s money on the basis of an unrestricted Mudaraba, in its capacity as a Mudarib. The profits are divided between the parties at a pre-agreed rate. The contract shall be for a specified period of one month, 3 months, 6 months, 9 months, 12 months or more. At the end of the investment period, the bank calculates the net profit after deducting its expenses.
Musharaka is the participation of two or more persons in a project for profit or in the ownership of an asset. The realized profits are shared between the partners on the basis of a pre agreed profit sharing distribution ratio. Any loss is borne in proportion to the capital provided by each partner.
Diminishing Musharaka
Diminishing Musharaka is a partnership between the bank and the customer in a project or an asset with the gradual ownership of either project or asset ending with the customer.
Ijara means the sale of a specific usufruct for a specified price.
Ijarah Muntahia Bittamleek.
The bank will buy the property from its seller and lease it to the customer. The rent is composed of a fixed and variable component. The fixed component represents the value of the asset and the variable component represents the bank’s profit. Once all the ijara installments have been paid, the asset is sold to the customer by way of a nominal sale.
This contract is used in Islamic banks to finance real estate and goods. The bank, in its capacity as a "manufacturer", manufactures the asset according to pre-agreed specifications and hands over the asset to the customer at a specified date in the future. The customer pays future rental payments to the bank for future usufruct of the asset until the asset is handed over to him, wherein the rental payments become actual for the present usufruct.
Sohar Islamic welcomes and offers products and banking services to all customers without discrimination.
Sohar Islamic deals in the implementation of financial transactions in all currencies approved and recognized by the Central Bank of Oman.
The customer can visit one of Sohar Islamic branches and submit the required documents and open the account.
Yes, at Sohar Islamic, we open joint accounts. Account activity can be carried out by the account holders, according to the authorization issued by the bank, whether the right to practice alone or together. However, it is not possible to open a joint account with a person under the age of 18 years.
Yes you can open a saving account for a minor under the age of 18 and the account is opened and administered by the guardian.
There are no restrictions that hinder the movements and withdrawals of funds from a saving account.
You can apply at any of the bank’s branches.
Yes, but you may not need to do if you meet certain special conditions.
You can apply at any of the bank’s branches.
Yes, except goods that are forbidden by Sharia or prohibited according to the laws of the Sultanate such as: Alcohol – Pork products – Drugs – Media materials blasphemous – Harmful consumption materials.
In Murabaha financing, you own the property which is mortgaged in favor of the bank until full installment payment is made. In ijara financing, the property only comes into the customer’s ownership at the end of the financing period.
All products and services offered by Sohar Islamic are prepared according to the Sharia rules and are free from Riba. The contracts governing these services are approved by the Bank’s Sharia Supervisory Board.
Yes, if you want to make an early settlement, you have to pay the remaining amount in full.
Ijarah financing can be taken for a maximum period of twenty five years.
The determination of the maximum limit depends on the type of finance required, the guarantees provided and the allowance period.
Minimum age for home financing is 18 years for Omani’s and 30 years for expatriates for a maximum period of 25 years.
Yes.
You can visit your nearest branches and enquire within.
Benefits:
Documental Requirements:
Omani
ID card
GCC citizens
Passport and ID card
Expertise
| Omani | Non Omani | |
|---|---|---|
| 300 OMR | 750 OMR | Minimum Salary |
| 3 Month | 24 Month | Minimum Duration of Service |
| 18 Years | 30 Years | Minimum Age |
You can find this out easily through our electronic calculator.
Yes, but the total monthly installments you pay currently and monthly installments of the car should not exceed 50% of your monthly income.
You need a valid driving license if you drive the car yourself. However, you can also delegate someone else to drive, if you do not have a driver's license or do not want to drive your own car. It would be preferable to ascertain who is involved in the subject as well.
Yes, we deal with all agents in Oman and some car showrooms as well.
Yes, the car belongs to you. If you decide to sell the car, you should settle your outstanding amount in full.
Advantages:
For required documents:
For new cars: Offer of the car in the name of Sohar Islamic
Terms of eligibility for car finance:
| Omani | Non Omani | |
|---|---|---|
| 300 OMR | 400 OMR | Minimum Salary |
| 3 Month | 3 Month | Minimum Duration of Service |
| 18 Years | 25 Years | Minimum Age |
| Saving Account | 3 Month | 6 Month | 1 Year |
|---|