The UAE's Islamic finance sector now holds AED1.4 trillion ($381.2 billion) in assets, spread across 43 licensed Islamic financial institutions operating in the country. The figure places the UAE third globally in the 2025 Islamic Finance Development Indicator, underscoring the sector's growing weight within the broader UAE financial system.
For residents and businesses engaging with Islamic banks, takaful providers, or Shari'ah-compliant investment funds, the ranking signals a sector that continues to expand alongside conventional finance, with regulatory frameworks maturing to match.
A national strategy with a 2031 target
In May 2025, the Cabinet approved the UAE Islamic Finance and Halal Industry Strategy 2025–2031, setting a target of AED2.56 trillion in local Islamic finance assets by 2031. That goal would represent significant growth from the current AED1.4 trillion base, and reflects a deliberate push to expand the industry's footprint over the coming years.
Legal foundations behind the growth
The expansion of Islamic finance in the UAE has been underpinned by a series of legal steps. Federal Decree-Law No. 50 of 2022 on Commercial Transactions was the first UAE commercial law to regulate Islamic finance contracts, giving the sector a clearer legal footing within the country's commercial code.
More recently, Federal Decree-Law No. 6 of 2025 was introduced to regulate the activities of Islamic financial institutions, along with their supervisory and Shari'ah frameworks. Together, the two laws form the backbone of how Islamic financial products and institutions are governed in the UAE today.
Shari'ah oversight has been building for years
Oversight of Shari'ah compliance in the UAE runs through the Central Bank, which established the Higher Shari'ah Authority in 2018. Since then, the authority has issued more than 280 standards and resolutions to regulate Islamic financial transactions, giving institutions a detailed rulebook to follow when structuring products and contracts.
That body of standards has grown alongside the sector itself, and appears to be one of the reasons the UAE has been able to scale up its Islamic finance assets while maintaining a consistent regulatory framework across 43 separate institutions.
What it means going forward
With the 2025–2031 strategy now in place and new legislation covering both commercial transactions and institutional supervision, the UAE's Islamic finance sector has a clearer regulatory runway than it has had in the past. Whether the sector reaches the AED2.56 trillion target set for 2031 will depend on how quickly institutions and depositors respond to the frameworks now being put in place, but the current $381.2 billion asset base and third-place global ranking mark where the industry stands today.