Islamic Finance
The Islamic Finance industry continues to experience accelerated growth, with global assets surpassing USD 3.38 trillion and has achieved growth rates of up to 11%. Islamic Finance primarily operates across Islamic banking, Takaful insurance, capital markets, and asset management sectors.
The term “Islamic finance” or “Shari’ah compliant finance” (and other similar terms) are used to refer to a financial sector that functions fully in accordance with Islamic Shari’ah principles in respect of all its operations and activities. The industry is established on the principle of sharing profit and loss as a vehicle for fund mobilization, and emphasizes real economic activity and added value in its dealings.
A key element of Shari’ah principles in financial transactions is the consideration given to the outcomes and impact of such transactions on individuals, wider society, and the environment. This is governed by a comprehensive framework of rules and parameters. Accordingly, any transaction that results in harm to individuals or the broader community, or is deemed unethical, is considered invalid. Furthermore, fundamental principles of Islamic finance require the elimination of injustice, illicit gain, deception, ambiguity (gharar - including gambling), and interest (riba) from financial dealings.
Islamic Finance in the United Arab Emirates
Since its inception, the UAE has been at the forefront of Islamic finance. The world’s first Islamic commercial bank was established in the UAE in 1975, under the patronage and support of the country’s wise leadership, to provide individuals and institutions with financial solutions aligned with Islamic Shari’ah principles. The UAE has demonstrated that modern financial institutions, founded on a commitment to Shari’ah compliance, are capable of delivering innovative and Shari’ah-compliant financial products and services.
Today, the UAE stands as one of the most advanced countries in Islamic finance, supported by a well-developed banking industry that comprises Islamic banks, Islamic banking windows, Islamic finance companies, and Takaful insurance providers. The Central Bank supervises 43 Islamic financial institutions, categorized as follows:
Islamic Banks
9
Islamic Banking Windows
15
Islamic Finance Companies
9
Takaful Insurance Companies
10
UAE Islamic Finance Significant Milestones
The Higher Shari’ah Authority
The Higher Shari’ah Authority (“HSA”) was established, and its Members appointed, in accordance with resolutions enacted by the UAE Cabinet. Decretal Federal Law No. (14) of 2018, regarding the Central Bank and organisation of financial institutions and activities and its amendments, reaffirmed HSA’s establishment and provided further details of its mandate. The law includes the obligations and responsibilities of the HSA, which aims to standardize and harmonize practice within the Islamic finance industry, aligning them with internationally- recognized Shari’ah standards and widely-recognized practices through collaboration with relevant stakeholders. The HSA’s goal is to support the creation of a robust infrastructure that enables further development of the UAE’s Islamic finance industry, and advances the UAE’s vision in becoming an internationally-recognized hub for Islamic finance.
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Islamic Financial Institutions
Takaful Insurance Companies
Islamic Finance News
Related Islamic Finance Regulations
Last updated on: Thursday 21 May 2026
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