To: All Licensed Banks in Oman

Subject: Adoption of International Accounting Standards (IAS) – Investment Portfolio

1. We invite a reference to Oman Central Bank Circular No. BM913/2001 dated May 5, 2001 on adoption of IAS and reporting requirements of the Capital Market Authority (CMA).

2. The IAS 39 provides option for the banks in classifying the investment portfolio into three categories viz. held for trading, available for sale and held to maturity on the basis of intent. The accounting treatments for recognition of changes in the value of securities parked under these categories are also different. While the Central Bank of Oman appreciates adoption of international accounting standards, the prudential-bias of the existing standards, evolved on the basis of specific market conditions in the Sultanate, should not be diluted either. For prudential purposes, it is decided that the Licensed Banks within the Sultanate should continue to adopt conservative standards. Further, the accounting standards followed by banks should also be uniform for meaningful analysis by supervisors and market players.