2026-08-13
The UAE intends to nearly double the assets of its Islamic banks to AED 2.56 trillion by 2031, under the national Islamic Finance and Halal Industry Strategy approved by the Cabinet in May 2025. The plan is already moving faster than its own baseline: the strategy started from AED 986 billion in Islamic banking assets, and by June 2026 the figure had reached AED 1.4 trillion across 43 licensed Islamic financial institutions. Alongside the growth targets, the state is introducing practical incentives, including exemptions from registration fees for Islamic finance transactions and a strengthened legal and Shari'ah framework designed to give banks, investors and businesses far more certainty about how Islamic contracts are treated.
What the 2025-2031 strategy sets out
The UAE Strategy for Islamic Finance and Halal Industry was approved on 6 May 2025 at a Cabinet meeting chaired by Sheikh Mohammed bin Rashid Al Maktoum. Its headline targets run to 2031 and cover the full breadth of the sector:
- Islamic banking assets: growth from AED 986 billion to AED 2.56 trillion.
- Local sukuk listings: an increase to AED 660 billion.
- International sukuk listed in the UAE: growth to AED 395 billion.
- Development of Islamic funds, money markets and takaful (Islamic insurance).
- Expansion of the halal economy, from certified production and traceability to halal tourism, modest fashion, Islamic media and waqf mechanisms.
Implementation is coordinated by a national committee chaired by the Governor of the Central Bank of the UAE, working with federal and local entities. In other words, this is not a single ministry programme but an economy-wide agenda with the banking regulator at the wheel.
The market is already ahead of the baseline
The August 2026 progress picture, reported by Gulf News with Central Bank data, shows why the target looks credible. Islamic banking assets stood at AED 1.4 trillion as of June 2026, meaning the sector covered roughly a quarter of the distance to the 2031 goal within the first year of the strategy. The UAE ranked third globally in the Islamic Finance Development Indicator for 2025, and the regulatory bench is deep: more than 280 Shari'ah standards and resolutions have been issued, along with a set of dedicated Shari'ah governance standards for financial institutions.
The retail side is developing too. In June 2026 the Ministry of Finance launched the first retail T-Sukuk, letting individual investors access dirham-denominated sovereign Islamic instruments from AED 1,000, a move we covered in detail in our article on the UAE's first retail T-Sukuk. Each layer, from sovereign issuance to retail access, deepens the same market the strategy is trying to scale.
Fee exemptions and legal certainty
Two provisions matter most for businesses that use, or plan to use, Islamic finance in the UAE.
First, exemptions from registration fees for Islamic finance transactions. Structures such as murabaha or ijara often involve the financier taking title to an asset and transferring it to the client, which can trigger registration steps that conventional loans never touch. Fee exemptions remove a cost penalty that has historically made some Islamic products more expensive to execute than their conventional equivalents.
Second, legal certainty. The Commercial Transactions Law (Federal Decree-Law No. 50 of 2022) gives Islamic finance contracts a clear statutory footing, and the Central Bank applies regulations approved by the Higher Shari'ah Authority, which standardises Shari'ah interpretations across the market. For a company negotiating an Islamic facility, this means less room for disputes about whether a given structure is enforceable and fewer surprises between one bank's Shari'ah board and another's.
Sukuk, funds and the wider halal economy
The strategy treats Islamic finance and the halal industry as one ecosystem. On the capital markets side, the targets of AED 660 billion in local sukuk and AED 395 billion in international listings would consolidate the UAE's position as a global sukuk hub, competing directly with Kuala Lumpur and London. Fitch has already noted that the strategy is set to boost the sukuk industry, with the UAE among the largest issuance bases in the world.
On the real economy side, the plan covers halal production and traceability, support for SMEs and technology startups in the halal sector, halal tourism, modest fashion and Islamic media. For founders, this is a signal of where licensing frameworks, government procurement and grant programmes are likely to concentrate over the next five years. A trading company with halal certification, a fintech building takaful tools, or a food producer targeting export markets in the Organisation of Islamic Cooperation all sit squarely inside the strategy's perimeter.
What it means for business in the UAE
Practical takeaways for companies operating in or entering the Emirates:
- Islamic financing is becoming cheaper to execute. Registration fee exemptions narrow the cost gap with conventional credit, so Islamic facilities are worth pricing against conventional offers even if your business has no religious mandate.
- Banking choice is widening. With 43 licensed Islamic institutions and assets growing at this pace, corporate clients can expect more competitive profit rates, trade finance lines and treasury products from Islamic windows and full-fledged Islamic banks alike.
- The halal economy is a licensed opportunity. Halal production, certification services, Islamic fintech and halal tourism are explicitly named growth areas, which usually translates into supportive licensing and faster approvals.
- Sukuk are opening to smaller players. Retail T-Sukuk start from AED 1,000, and a deeper local market will gradually make sukuk issuance realistic for mid-sized corporates, not only governments and blue chips.
How Atlant Capital can help
Atlant Capital helps founders and investors build their UAE presence end to end. We register companies on the mainland and in free zones, including structures aimed at the halal economy and financial services, and we know which licences fit which activity. Our company setup service covers the full path from name reservation to licence issue. We also open corporate and personal accounts with both conventional and Islamic banks in the UAE; our bank account opening service includes matching your business profile to the bank most likely to approve it and preparing the compliance file. If you want to compare an Islamic facility with a conventional one for a specific deal, we can structure the question for the banks and manage the process.
Conclusion
The UAE has put a number on its Islamic finance ambition: AED 2.56 trillion in banking assets, AED 660 billion in local sukuk and AED 395 billion in international listings by 2031. With assets already at AED 1.4 trillion in June 2026 and incentives like registration fee exemptions taking effect, the strategy is less a vision document than a delivery schedule. For businesses, the message is simple: Islamic finance in the UAE is getting bigger, cheaper and legally safer, and it belongs on the option list of any company banking in the Emirates.
FAQ
What is the UAE Islamic Finance and Halal Industry Strategy?
It is a national strategy for 2025-2031, approved by the UAE Cabinet on 6 May 2025, that aims to grow Islamic banking assets from AED 986 billion to AED 2.56 trillion, raise local sukuk listings to AED 660 billion and international sukuk listings to AED 395 billion, and expand the halal industry. Implementation is coordinated by a committee chaired by the Central Bank Governor.
How big is Islamic banking in the UAE in 2026?
As of June 2026, Islamic banking assets in the UAE reached AED 1.4 trillion, held across 43 licensed Islamic financial institutions. The UAE ranked third globally in the Islamic Finance Development Indicator for 2025, and regulators have issued more than 280 Shari'ah standards and resolutions.
What incentives does the UAE offer for Islamic finance transactions?
Islamic finance transactions benefit from exemptions from registration fees, which removes extra costs created by asset-transfer steps in structures like murabaha and ijara. The Commercial Transactions Law (Federal Decree-Law No. 50 of 2022) and the Higher Shari'ah Authority's standardised rulings also give Islamic contracts clearer legal enforceability.
Can a foreign-owned company use Islamic banking in the UAE?
Yes. Foreign-owned companies registered on the UAE mainland or in free zones can open accounts and obtain financing from Islamic banks on the same basis as from conventional banks. The choice usually comes down to pricing, product fit and the bank's appetite for the company's activity profile rather than the ownership or religion of the shareholders.
