To: All Licensed Banks and FLCs

Operating in the Sultanate of Oman

After Compliments,

Sub: Implementation of International Financial Reporting Standard 9 on Financial Instruments

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1. Reference is invited to earlier correspondence on the above subject, including circular letter BDD/CBS/CB/20 14/8282 dated 21st September 2014 and responses submitted by banks.

2. In pursuance of the same, Board of Governors of Central Bank of Oman, upon recent review on 23rd March 2015, reiterated that in order to protect the financial soundness of banks, avoid losses likely to arise from aggressive rewards to senior management and streamline the concerned process, it is necessary to strike a balance between risks and rewards and decided the following:

i. Banks should set up a Remuneration Committee from their Board Directors in order to study the subject-matter and regulate and control without the Central Bank's intervention.

ii. The Committee should implement the applicable Principles and Standards provided by Financial Stability Board.

3. Central Bank of Oman wishes to add the following m this connection: