Question

Read the case study and answer the question:
Mr. Fahad is an accounting graduate and has started working in a financial advisory and
consultancy firm ‘Elite Consultants’ based in Muscat. In his first assignment, Mr. Fahad has
been advised to provide advisory services to a client who is planning to start a new private
college in Samail. To arrange the capital for establishing the college, the client is looking at
finance options other than commercial banks. The estimated cost of the college project is
OMR 450,000.
Mr. Fahad remembers studying the financial system and is aware that a sound financial
system is essential to promote sustainable economic development. He also knows that
besides commercial banks, other banks also have an important role to play in the financial
system of the nation. And one such bank is Oman Development bank.
Mr. Fahad has approached you for further guidance before he prepares an advisory note for
his client.
You are required to advise Mr. Fahad on the following :
a) Introduction to Oman Development bank and the services it offers.
(80 words minimum)
b) Details of the Product offered by Oman Development Bank which deals with the loans
for the college. (70 words minimum)
c) What is the maximum amount the client can get from Oman Development Bank for
this college project which is estimated to cost OMR 450,000? What would be the rate
of interest? What are the other conditions of the loan?
(80 words minimum)
d) Assume that Oman Development Bank has given the loan for this college for an
amount of OMR 200,000. How will this amount due from the client will be treated in
the accounts of the bank? (120 words minimum)

Answer 1

A)Oman Development bank is one of the leading bank, which is located at Muscat. To provide necessary long and short term financial resources that are required to support the development activities of Large, Medium & Small Enterprises in line with the Government goals to diversify the sources of national revenue.

Vision for Oman Development Bank

To be a leading Bank on financing development projects of Large, Medium & Small Enterprises by leveraging the professionalism of its employees and quality of its customer service.

Services offered by Oman Develepment bank   for the following fields:

• "Izdihar" Fixed Term Deposit Scheme
• Agricultural Loans
• Agricultural, Livestock Loans
• Educational Institution Loans
• Fisheries & Livestock Loans
• Industrial Projects Loans
• Information Technology Loans
• Mawsimi
• Medical institutions loans
• Professional Loans
• Small Investment Loans – Free interest
• Tourism Loans
• Working capital

B) Oman development bank offers subsidied loans for the following fields:

• Tourism projects loans
• Medical projects loans
• Agricultural projects loans
• Professional loans
• Fisheries and Livestock projects loans
• Small Investors loans
• Educational projects loans
• IT projects loans
• Industrial projects loan

Education is considered as one of the main priorities of the wise government of H.M Sultan Qaboos bin Said, giving the utmost care and basic support for the development of human capabilities. Accordingly, Oman Development bank plays a Important role by granting loans to this sector.

Educational Institutional Loans

Who can request

Who can request this service

Customers who are willing to finance :

• Universities
• Colleges
• Private Schools
• Kindergartens
• Nurseries
• Vocational Training Institutes and any project or service within the education sector

C)Maximum amount of loan can get from Oman development bank is RO 1 Million per project.

Our client needs OMR 450000 which is less than maximum.

Interest to be charged by Oman Development bank.Loans are offered at a subsidized interest rate of 3% per year on reducing balances. It has also scheme of interest free loans to small investors seeking loan up to RO 5,000 with separate eligibility criteria.

• Oman development bank offers subsidied loans for the following fields:
  1. Tourism projects loans
  2. Medical projects loans
  3. Agricultural projects loans
  4. Professional loans
  5. Fisheries and Livestock projects loans
  6. Small Investors loans
  7. Educational projects loans
  8. IT projects loans
  9. Industrial projects loan

Documents needed to process

• Copy of the permit, registration, or approval issued from the concerned authority, whether for new or existing projects.
• The official documents that show the legal entity of the project.
• The documents pertaining 3 quotations from contractors/suppliers of assets.
• The feasibility study (Cost of Projects more than RO 100,000.

Special conditions if any applicable-Organizations with Commercial registration in Oman.

D)If Oman development bank provided loan OMR 200000 to client for his college set up.

Loan provided will be treated in Oman development bank as advance in balance sheet as due(Asset side of balance sheet)

Any interest Received from loan given to customers then such amount will be shown as income in profit and loss account.