Opening an account
How to open a bank account in Oman
Oman - Money
Opening a bank account in Oman involves a considerable amount of paperwork.
You need a residence visa before you can open an account, the visa proves your right to be in Oman. You also require a ‘letter of no objection’ or a ‘no objection certificate’ (NOC) from your employer. The employer should state your salary to show the amount that will regularly be paid into the bank. Some banks will ask to see your tenancy agreement in order to establish your residential address, and most will ask for a photocopy of your passport. You should take copies of all these documents, as well as several passport-size photographs with you when you go to the bank.
A worker’s dependants (e.g. wife and family) can open an account with his permission, as he is considered their de-facto sponsor.
When moving to Oman to live and work, it’s unlikely that you will close your bank account at home, particularly if you still have payments to make to cover financial commitments in your home country. In order to limit your tax liabilities there, however, you should keep these accounts´ activity to a minimum.
Look into opening an offshore bank account to maximize your savings.
Cash is preferred for everyday transactions in Oman, where people are generally suspicious of cheques. In fact, although utilities companies and other major service providers accept personal cheques for regular payments, local retailers do not. Cheques do not guarantee payment, even though issuing a cheque without the necessary funds in your account is a criminal offence in Oman. Therefore, most current accounts are not cheque accounts, though these are also available.
All the standard banking services are offered by Omani banks, including: cheque clearance, standing orders, direct debits and credit card repayments. A certain number of transactions per year are usually free, after which the bank levies a small fee, usually at the discretion of the bank manager. Charges vary between banks, as they do in other countries, so shop around before opening an account with a particular bank. Cash dispenser cards are issued as a matter of routine, with the standard security measure of personal identification numbers (PIN) to allow access to your money through ATMs. Personal credit and charge cards, most of them underwritten by Visa or Mastercard, might also be issued by a bank, but you must be negotiate their purchase with your banker and they often come with spending restrictions.
It might be in your interest to open an account with your employer’s bank: favourable terms might be offered for group accounts and your salary might be accessible more quickly if the accounts are in the same system.
If you wish to change bank, however, it pays to be honest and close your account instead of leaving a small amount in it to keep it active, as you’re likely to incur charges. Current accounts pay little or no interest on account balances and, if they do, you must usually have a substantial balance to qualify. It’s better to keep surplus funds in a savings or deposit account.
The information shown on personal cheques is fairly standard (i.e. the name of the bank, the branch, your name(s), the date, etc.), and the layout of cheques is similar to UK or American cheques. The recipient’s name is written on the top line, the amount written in words on the following line and the amount in figures entered in the adjacent box. You sign the cheque on the line at the bottom.
An important point to remember is that Arab names are very similar, especially in their diminutive form, so you should be sure to write the full name of an Arab recipient. You aren’t entitled to reimbursement for a ‘misdirected’ cheque if you’ve been careless and inaccurate when writing it, although banks are responsible if they’ve honoured a cheque which doesn’t bear your proper signature.
Blank cheques are available in English or in Arabic (which is read and written from right to left), and bank statements and correspondence can be provided in either language (your bank should use the appropriate language automatically). The business language of the region is English, so you should encounter no difficulties if you can communicate in Arabic or English.
Both crossed and uncrossed cheques are available. Crossed cheques (marked with ‘A/C Payee Only’ on a 45 degree angle) can be paid only into the payee’s account and are therefore safer. An uncrossed cheque can be paid into any account, although the bearer is normally asked to endorse the back of the cheque. To ensure that a cheque can only be paid into the account of the payee, you must add the words ‘A/C Payee Only’ between the crossed diagonal lines on the cheque.
Uncrossed cheques made out to ‘Bearer’ or ‘Cash’ are treated as currency and can be cashed by anyone.
When buying a major item such as a car on credit, the bank funding the loan is likely to issue you with a series of post-dated monthly cheques, to be passed to the vendor, who will present the cheques on the appropriate dates for settlement. You should ensure that the cheques are correct in every detail and that you keep any receipts issued. Make sure also that there are sufficient funds in your account to meet the payments. If you’re unable to meet a payment, you must notify your bank in advance to make an appropriate arrangement. Banks are usually helpful in such cases (as no bank wants to acquire second-hand cars in default of payment). In the case of a motor vehicle purchase, the official registration of the vehicle might show the bank as the official owner until the loan has been repaid in full.
For utility bills, direct debits can be arranged with your bank to cover regular payments, but make sure that you check your statements to ensure that these instructions are being carried out. Alternatively, you can pay utility bills in cash at any bank, irrespective of whether you have an account there.
You can of course pay cheques drawn on foreign banks in major currencies into your local account. You might be credited with the amount straight away, but some banks wait for clearance, which can be a lengthy process. If you’re expecting regular payments of this kind, check whether your local bank has correspondent status with the foreign bank involved, which will precipitate payments. If not, you might need to find a quicker method of being credited with the money.
Never overdraw your bank account unless you have authorisation from the bank. If you do so and the sum is small, your bank might pay the amount and inform you of the shortfall, or they might pay only the amount held in your account, or they might not honour the cheque at all. The last is unlikely, unless you’re a new customer or have a poor record with the bank. In most cases of an unauthorised overdraft, you will incur a substantial charge and the bank will question you about the incident.
A large transient expatriate population means that financial abuses aren’t uncommon in Oman, so banks protect their interests carefully, usually with the support of the judicial system. Issuing a cheque without the necessary funds in your account is a serious criminal offence in the region and the police will be notified at the discretion of the bank (or creditor) concerned. Prosecution is common and punishments can be harsh.
It’s important to understand that expatriates are unlikely to receive much in the way of sympathy and understanding if they have financial difficulties while living in Oman, since their services in the country are viewed as expendable.
Savings & Deposit Accounts
You can open a savings or deposit account with any retail bank in Oman. Although savings accounts offer lower interest rates than deposit accounts, they tend to be more readily accessible. Savings account holders might receive a passbook in which financial transactions can be recorded, but most banks simply issue a monthly statement to record the progress and details of the account. Banks might also issue account holders a cash card for use in ATMs, a cheque book or even a credit card, depending on the type of account.
There are many types of deposit accounts available, offering varying rates of interest according to the amount of the deposit and the minimum length of the deposit period. High interest accounts are available but require substantial amounts to be deposited in order to qualify for the higher levels of interest. Some banks offer standing order facilities with these accounts and issue cheque books for them, but they often come with maintenance charges and a limit on the number of cheques that can be issued annually.
In many banks, you can open savings accounts designed for major foreign currencies, predominantly US dollars and British Pounds. Most expatriates, however, simply choose to export the majority of their income to accounts outside the region.
This article is an extract from Living and Working in Gulf States & Saudi Arabia. Click here to get a copy now.
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