Oman's central bank granted approval to set up a new bank providing Islamic services as the sultanate opens its doors to the fast-growing industry, the central bank said in a statement to the state-owned news agency.

The central bank said it has given approval to establish Bank Nizwa to provide Islamic banking services inside Oman, adding that 'it will consider any application to open windows for the Islamic banking by any bank operating in the sultanate wishing to provide such services.'

Oman is the only Gulf Arab state which until now has not set up a bank specifically offering products and services complying with Islamic law. Its central bank head said in 2007 that Oman believed that 'banks should be universal'.

But the central bank reversed its stance earlier in May saying it would allow for a wholly-Islamic financial institution, as well as Islamic branches of conventional banks.

Existing banks in the Gulf state, however, will not be allowed to switch to become Islamic banks, a central bank official told Reuters.

Islamic finance is estimated to be a nearly $1 trillion industry worldwide. – Reuters