Dubai, UAE – April 18, 2025: Islamic banking in the United Arab Emirates is commemorating a milestone, celebrating 50 years of success and progress. Islamic banking for the past 50 years not only transformed the banking landscape of the UAE, but the nation is now a world leader for Islamic finance & banking. The commitment of the UAE to Islamic banking principles, innovation, and quality service have made it a leader of a solid, well-established industry.
The Growth Story of Islamic Banking in the UAE
Islamic banking within the UAE began with the introduction of the world’s first Islamic commercial bank, that of Dubai Islamic Bank, in 1975. This opened up a new age of banking within the nation. Islamic banking grew by leaps and bounds after that, with the UAE now being home to nine specialist Islamic banks and 17 finance & banking windows operated by mainstream banks. Islamic banking now accounts for about 23% of the UAE banking assets, with the worth of the assets being well over $163 billion.
The UAE government is the key driver of finance & banking. The federal law for Islamic banks, as well as the Higher Shari’ah Authority, whose duty is to ensure Islamic banks abide by the dictates of Sharia, was introduced in 1985. Finance & banking therefore gained momentum steadily, through the strong backing of the regulating environment, and gained customers’ trust.
Finance & banking operations in the UAE first started by offering simple products of retail banking such as savings, current accounts, personal lending, and home lending. Later, the service extended itself to cover corporate banking, investment banking, wealth management, as well as asset management. These many products have attracted individuals as well as businesses looking for ethical as well as Sharia-compliant products.
Milestones and Achievements in Islamic Banking
The banking of the UAE has had many milestones within the past 50 years. In 1979, its first takaful (Islamic insurance) company opened. In 2004, the Dubai Government made its first issuance of sukuk (Islamic bond), providing a conduit for further issuances of sukuk within the UAE as well as the region as a whole. In 2013, Dubai aimed to be the “Capital of the Islamic Economy” as another push for growth for the sector.
The UAE is furthermore a leader of sustainable Islamic finance. In 2018, its first sustainability-linked Islamic funding occurred, followed by the first corporate green sukuk issuance in 2019. These steps prove the dedication of the industry not only to Islamic teachings, as defined by Sharia, but being environmentally conscious as well.
There is a growth being realized within the UAE Islamic banking through technology innovation. Online portals as well as mobile applications have been introduced by banks so that customers can manage banking facilities easily. Islamic banks have created new products as well as services through collaborations with FinTech, thus propelling Islamic banking further.
The UAE Islamic banking segment is increasingly being eyed by international players. A number of international Islamic banks have set up their branches in the UAE, attracted by the country’s good regulation as well as its massive customer base. The segment is further preferred by the affluent investing in their desire for Sharia-compliant wealth management as well as private banking.
UAE Islamic Finance Milestones
| Year | Milestone |
|---|---|
| 1975 | Dubai Islamic Bank established – world’s first Islamic commercial bank |
| 1979 | First takaful insurance company (SALAMA) established |
| 1985 | UAE banking law and Higher Shari’ah Authority introduced |
| 1988 | Abu Dhabi Islamic Bank established |
| 2002 | Sharjah Islamic Bank launched |
| 2004 | First sovereign sukuk issued by Government of Dubai |
| 2013 | Dubai launches “Capital of the Islamic Economy” initiative |
| 2018 | First sustainability-linked Islamic financing in the Middle East |
| 2019 | First corporate green sukuk issued in the Middle East |
| 2020 | Merger of Dubai Islamic Bank and Noor Bank |
| 2022 | Debut of sustainable sukuk by a UAE Islamic bank |
| 2023 | Launch of local-currency Treasury sukuk by UAE government |
The Future of Islamic Banking in the UAE
Islamic banking in the UAE is set for further expansion over the next few years. UAE finance & banking is well-supported by a strong legal framework, as well as a growing need for Islamic products. The push for digitalization, innovation, and sustainability by the UAE will propel Islamic banking into new realms.
The Islamic world of finances expanded by a return of 10.6% in the year 2024, with the UAE contributing significantly towards the expansion. The Islamic banking of the country is famous for its resilience alongside its ability to adapt for evolving market needs. On its 50th anniversary of Islamic banking, the country is making new milestones continuously within the Islamic finance & banking world.
The UAE Islamic banking is a model for others. It is a mix of tradition and innovation, yielding ethical, customer-focused solutions. UAE finance & banking, based on its strong roots and vision for the future, will continue as a necessary part of the country’s economic future.
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