New player for money exchange market in Oman

20/10/2014 06:53 AST

Oman Investment and Finance Company (OIFC), which is specialised in third-party utility billing and collection business, on Sunday said that the company has received commercial registration from the Ministry of Commerce and Industry to form a new exchange company called Wasel Exchange.

The new exchange company, which is yet to get a final licence from the Central Bank of Oman (CBO), is a wholly-owned subsidiary of OIFC and will have a capital base of OMR1.5 million, according to a disclosure statement posted on MSM website.

The plan to float an exchange company is part of OIFC's larger strategy to diversify revenue streams, in an apparent move to bring down its current over-dependence on third party utility billing and collection business. OIFC is looking at business opportunities where the company has synergies and can take advantage on its nation-wide branch network.

"Ours is a collection business and our strength can be leveraged to an extent CBO allows us to do so. This is a natural business for us," said a company source.

"I expect the exchange company to start operation within three to four months. But we have to comply with certain standard CBO requirements, after getting commercial registration. I don't foresee any delay," added the source, who does not want to be named.

More than three years ago, OIFC tried to acquire a majority stake in an existing exchange house. But the plan was scrapped at a later stage. And later on, the company decided to promote a separate money exchange as its own and received an 'initial approval' from the Central Bank of Oman in April 2012 and the company formation is progressing now.

Towards the end of 2013, the apex bank brought in a two-year moratorium on licences for new exchange houses to prevent overcrowding.

The Sultanate's banking regulator stipulates that the money exchanges with a remittance licence are required to have a minimum capital of OMR1 million, while the requirement is OMR100,000 for those exchange houses carrying out only money change business.

If everything goes well, OIFC's Wasel Exchange will be the sixteenth money exchange in the country. The fifteen existing companies have strength of 250 branches across the country, handling approximately 10 million remittances in a year. Of late, there has been a major focus on branch expansion by few leading exchange houses to strengthen their market share.

Another source in money exchange said that the return on investment in money exchanges is relatively high, although the initial investment is also on the higher side.

However, the exchange house official also noted that the remittances by Indian expatriates, which constitute a major chunk of the business, are coming down in the last one to two months, mainly on account of a slowdown in Indian workers coming to take up new assignments in Oman.

Restrictions on employment visa (especially a two-year ban on existing foreign workers) and delay in getting family joining visa are cited as reasons for a slow down in Indian workers coming to Oman.

Times of Oman