To: All Licensed Banks Operating in the Sultanate of Oman

After Compliments,

Sub: Prompt Corrective Action (PCA) Framework

1. Please refer to our Circular BM 987 dated May 23, 2005 introducing a Prompt Corrective Action (PCA) framework to deal with weak banks, based on BIS capital ratio and NPL ratio of banks. As you are aware, with the adoption of Basel II, the regulatory minimum for BIS Capital ratio of licensed banks has been revised to 10% of risk-weighted assets with effect from 1st January 2007, from 12% stipulated earlier. In view of this change, the trigger points of BIS Capital Ratio under the PCA framework have been suitably revised. The revised PCA framework provided hereunder in this circular supersedes Circular BM 987 dated May 23, 2005 and is implemented with immediate effect.