American Academy of English Banking and Financial Products & Services Paper I need a correction for this answer Just correctFor any clarification please a

American Academy of English Banking and Financial Products & Services Paper I need a correction for this answer Just correctFor any clarification please ask 1
Banking and Financial Products & Services
Name
University
May 07, 2020
2
Table of Contents
Banking and Financial Products & Services ……………………………………………………………………….. 1
DIFFERENT TYPES OF BANKS AND FINANCIAL INSTITUTIONS OPERATING IN
OMAN ………………………………………………………………………………………………………………………….. 3
ESSENTIAL DIFFERENCES BETWEEN THE DIRECT AND INDIRECT FINANCING AND
THE CHARACTERISTICS OF THE FINANCIAL INSTRUMENTS ………………………………….. 5
Loan Summary and schedule of Short term loan ……………………………………………………………… 6
Loan Summary and schedule of Long term loan ……………………………………………………………… 7
References ……………………………………………………………………………………………………………………… 9
3
DIFFERENT TYPES OF BANKS AND FINANCIAL INSTITUTIONS
OPERATING IN OMAN
The Banking Law of Oman states that its objective is to “Promote the development of
Banking Institutions which will ensure the maintenance of monetary and financial stability,
contribute to the economic, industrial and financial growth and enhance the position of the
Sultanate in international financial affairs (Kenton, 2020). Several types of banks and financial
institutions are operating in Oman. The central bank, Investment Banks, Retail and Commercial
Banks, and Internet banks are the types of financial institutions that are operating in Oman.
Central Bank is a financial institution that is responsible for the management of all other banks.
The Retail Banks are offering products to the individual consumers while the Commercial Banks
are working directly with the businesses. These products that are offered by Retail and
Commercial Banks include checking and savings account, personal and mortgage loans, credit
cards and business banking accounts, and certificates of deposit. On the other hand, Investment
Banks are helping businesses, governments, and individuals to raise capital through the issuance
of securities. Lastly, the Internet Banks are offering the same products and services with the
Conventional Banks but it is through online platforms.
There are top 10 banks in Oman which provide retail banking, investment banking,
corporate banking, Islamic banking, treasury, private banking, asset management services,
wholesale banking, funding center, government and project finance syndication, commercial
banking and global banking. These banks are; Bank Muscat, Bank Dhofar, National Bank of
Oman, Alizz Islamic Bank, Oman Arab Bank, Bank Nizva, Ahli Sonar, Beirut Oman Bank, and
HSBC Oman. These banks are licensed to operate and to provide financial assistance and
services to the people who live in Oman.
4
Omar Arab Bank or any other bank is called the financial intermediary as it performs the job of
the pooling of the funds and channelizing the savings on behalf of the depositor. It also has the
responsibility of acting as a link between the customer and Central bank and implements its
policies. It accepts deposits from those who want to save and provides loans to borrowers for
productive activities. With the help of the multiplier process, under the fractional reserve system,
the bank can create money many times in comparison to the initial deposit. This is called money
creation and takes place with the help of a money multiplier mechanism. The Muscat security
market is important is Oman as it is the primary and the main market in Oman. The Muscat
Securities Market (MSM) is Oman’s stock exchange and it regulates the securities market of the
sultanate. MSM enables trading in public joint-stock companies, government bonds, corporate
bonds, investment funds, and other financial instruments. Thus it facilitates the economic growth
of Oman, systematically supports Oman’s capital market, and contributes to Oman’s GDP
growth as well. The economic development of Oman is not possible without a central bank. This
is because without a central bank controlling liquidity will not be structured. Secondly there will
not be the presence of monetary policy tools that can be used to propel and stimulate economic
growth. Thirdly instruments like open market operations, interest rate control, and reserve
requirements will be conspicuous by their absence. Fourthly it will be difficult to stabilize
Oman’s currency without the intervention of the central bank. Fifthly and lastly it will become
difficult to properly regulate banks in a manner to ensure that the machinery of the economy
remains fueled and charged at all times (Seth, 2015).
FINANCIAL Health of a country is a yardstick of economic development. This is so because
good financial health means more income in-country or a better situation of a country to carry on
day to day transactions. This can be possible if a good amount of money is flowing into the
5
economy. It further happens with the Financial Institutions who provide loans to the people,
largely to carry on with their entrepreneurship i.e. to make investments in the economy. This
investment creates jobs, and then increases the income of the public, hence increasing their
consumption. If the money is saved then again it will be deposited in financial institutions
leading to a multiplier effect. Therefore, with more investment, there will be more production
and hence more economic growth.
ESSENTIAL DIFFERENCES BETWEEN THE DIRECT AND INDIRECT
FINANCING AND THE CHARACTERISTICS OF THE FINANCIAL
INSTRUMENTS
There are different methods of financing, indirect and direct financing are included in these
methods. Direct finance is a method of financing wherein the borrower borrows funds from the
financial market directly. In the method of direct financing, there is no usage of a third-party
service. There is a direct connection to the financial markets and this involves the company’s
borrowing of funds directly from the investors. Direct financing requires the borrower to go
directly to its investors. While on the other hand, indirect financing is a method wherein the
borrowers borrow funds from the financial market through indirect means, such as a bank
(Smirti, 2020). This method occurs when a company borrows money from a financial
intermediary. The company pays the intermediary interest while the intermediary pays the
interest to its investors and depositors. Between these two methods, indirect financing is more
important than the direct financing methods. It is because of the added efficiency available
through the financial intermediary.
6
In the methods of financing, the usage of financial instruments is included. Financial
instruments are assets that can be traded or they can also be seen as capital that may be traded.
Most of the financial instruments can provide efficient flow and transfer of capital throughout the
world’s investors. These assets can either be cash or a contractual right to deliver or receive cash.
Several types of financial instruments are used in the industry. Cash instruments, Derivatives
instruments, Debt-based financial instruments, and equity-based financial instruments are some
of the examples of the types of financial instruments that are typically used.
Loan Summary and schedule of Short term loan
Summary
The type of this loan is the short term loan. I have chosen this loan since it was paid monthly
with a small interest rate of only 0.05%. It has only paid by 1 year with the loan amount of
$100,000.00. The date started is June 30, 2020 and it will end by June 30, 2021
.
Loan Summary and schedule of Short term loan
Summary
The type of this loan is short term loan. I have chosen this loan since it was paid monthly with a
small interest rate of only 0.05%. It has only paid by 1 year with the loan amount of
$100,000.00. The date started is June 30, 2020 and it will end by June 30, 2021.
The schedule of Short term loan
7
Loan Summary and schedule of Long term loan
Summary
The type of this loan in the long term loan. I have chosen this loan since I have to invest in my
business and it needs a big capital with a small interest rate of only 0.05%. It has only paid by 3
years with the loan amount of $100,000, 000. 00. The date started is June 30, 2020 and it will
end by June 30, 2023.
The schedule of Long term loan
Serial
No.
1.00
2.00
3.00
4.00
5.00
Date
4401
2.00
EMI
amount
31124.2
6
31043.3
6
30962.4
6
30881.5
6
30800.6
6
Principal
component of
EMI
Interest
component of
the EMI
27777.78
3346.48
27777.78
3265.58
27777.78
3184.68
27777.78
3103.78
27777.78
3022.88
Interest
paid
24431.3
0
24512.2
0
24593.1
0
24674.0
0
24754.9
0
Principal
paid
Principal
balance
86679.82
913320.18
86598.92
913401.08
86518.02
913481.98
86437.12
913562.88
86356.22
913643.78
8
6.00
7.00
8.00
9.00
10.00
11.00
12.00
4437
7.00
13.00
14.00
15.00
16.00
17.00
18.00
19.00
20.00
21.00
22.00
23.00
24.00
25.00
26.00
27.00
28.00
4474
2.00
30719.7
6
30638.8
6
30557.9
6
30477.0
6
30396.1
6
30315.2
6
30234.3
6
30153.4
6
30072.5
6
29991.6
6
29910.7
6
29829.8
6
29748.9
6
29668.0
6
29587.1
6
29506.2
6
29425.3
6
29344.4
6
29263.5
6
29182.6
6
29101.7
6
29020.8
6
28939.9
6
27777.78
2941.98
27777.78
2861.08
27777.78
2780.18
27777.78
2699.28
27777.78
2618.38
27777.78
2537.48
27777.78
2456.58
27777.78
2375.68
27777.78
2294.78
27777.78
2213.88
27777.78
2132.98
27777.78
2052.08
27777.78
1971.18
27777.78
1890.28
27777.78
1809.38
27777.78
1728.48
27777.78
1647.58
27777.78
1566.68
27777.78
1485.78
27777.78
1404.88
27777.78
1323.98
27777.78
1243.08
27777.78
1162.18
24835.8
0
24916.7
0
24997.6
0
25078.5
0
25159.4
0
25240.3
0
25321.2
0
25402.1
0
25483.0
0
25563.9
0
25644.8
0
25725.7
0
25806.6
0
25887.5
0
25968.4
0
26049.3
0
26130.2
0
26211.1
0
26292.0
0
26372.9
0
26453.8
0
26534.7
0
26615.6
0
86275.32
913724.68
86194.42
913805.58
86113.52
913886.48
86032.62
913967.38
85951.72
914048.28
85870.82
914129.18
85789.92
914210.08
85709.02
914290.98
85628.12
914371.88
85547.22
914452.78
85466.32
914533.68
85385.42
914614.58
85304.52
914695.48
85223.62
914776.38
85142.72
914857.28
85061.82
914938.18
84980.92
915019.08
84900.02
915099.98
84819.12
915180.88
84738.22
915261.78
84657.32
915342.68
84576.42
915423.58
84495.52
915504.48
9
29.00
30.00
31.00
32.00
33.00
34.00
35.00
36.00
4510
7.00
28859.0
6
28778.1
6
28697.2
6
28616.3
6
28535.4
6
28454.5
6
28373.6
6
28292.7
6
27777.78
1081.28
27777.78
1000.38
27777.78
919.48
27777.78
838.58
27777.78
757.68
27777.78
676.78
27777.78
595.88
27777.78
514.98
26696.5
0
26777.4
0
26858.3
0
26939.2
0
27020.1
0
27101.0
0
27181.9
0
27262.8
0
84414.62
915585.38
84333.72
915666.28
84252.82
915747.18
84171.92
915828.08
84091.02
915908.98
84010.12
915989.88
83929.22
916070.78
83848.32
916151.68
References
Kenton, W. (2020). The Ins and Outs of Financial Instruments. Retrieved May 6, 2020, from
https://www.investopedia.com/terms/f/financialinstrument.asp
Smirti. (2020). Indirect Finance – Financial Management. Retrieved May 5, 2020, from

Indirect Finance – Difference between Direct and Indirect Finance | Financial Management

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Oman’s Financial System CBO Root Site Collection (2020). Retrieved from
https://cbo.gov.om/Pages/OmanFinancialSystem.aspx
Seth, T. (2015). Important Types Of Banks – Discussed! Retrieved May 5, 2020, from

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