UAE Islamic Finance 2031 Target Reaches AED 2.56 Trillion
The UAE is targeting Dh2.56 trillion in domestic Islamic finance assets by 2031, placing Shari’ah-compliant finance at the centre of its broader financial and halal-economy ambitions.
The target forms part of the UAE Islamic Finance and Halal Industry Strategy 2025–2031, approved by the UAE Cabinet in May 2025. Meanwhile, Islamic bank assets had already reached Dh1.4 trillion by June 2026, with 43 Islamic financial institutions licensed nationwide.
The strategy goes beyond asset growth. It also seeks clearer legal and Shari’ah rules, stronger customer protection and greater consistency across Islamic financial products.
UAE strengthens the legal framework for Islamic finance
A key priority is reducing uncertainty around how Islamic finance contracts are interpreted and enforced. The UAE’s Commercial Transactions Law, Federal Decree-Law No. 50 of 2022, includes a dedicated framework governing Islamic finance contracts and financing arrangements.
The law also connects relevant provisions with Shari’ah standards issued by the Higher Shari’ah Authority, creating a clearer basis for interpreting transactions and resolving disputes. Furthermore, the Central Bank of the UAE can issue regulations with the approval of the Higher Shari’ah Authority.
This approach aims to standardise Shari’ah interpretations while clarifying the rights and obligations of financial institutions and their customers. Consequently, the regulatory framework is designed to strengthen confidence in Islamic financial products while supporting innovation across the sector.
The Central Bank of the UAE, meanwhile, oversees the regulatory and supervisory framework for Islamic financial institutions under the Central Bank Law, Federal Decree-Law No. 6 of 2025.
The framework also allows Islamic financial institutions to conduct transactions involving real estate and goods where those assets are required to structure Shari’ah-compliant financing. Additionally, certain Islamic financial transactions are exempt from registration requirements and similar fees or costs.
Customer protection remains a central objective. The framework seeks to strengthen trust in Islamic finance while creating a regulatory environment that allows institutions to develop new products within defined legal and Shari’ah parameters.
More than 280 Shari’ah standards support market consistency
The Higher Shari’ah Authority, established at the Central Bank in 2018, plays a central role in creating greater consistency across the UAE’s Islamic finance industry.
To date, it has issued more than 280 standards and resolutions covering Islamic financial transactions, as well as more than 9 Shari’ah governance standards. These measures are intended to reduce differences in interpretation between institutions and provide greater consistency for customers and investors.
At the same time, prudential requirements covering financial integrity, risk management and institutional stability support the wider regulatory framework. This combination of Shari’ah governance and financial supervision is important as the UAE seeks to expand Islamic finance beyond traditional banking.
The country already holds a strong position internationally. The UAE ranked third globally in the Islamic Finance Development Indicator for 2025, highlighting the scale of its existing financial ecosystem.
However, reaching Dh2.56 trillion will require growth across several segments, not just Islamic banking.
Sukuk, funds and the halal economy become growth priorities
The national strategy also targets the development of sukuk, Islamic money markets and Islamic investment funds. It aims to create larger, more competitive Islamic financial institutions while expanding the range of Shari’ah-compliant investment products available in the UAE.
The strategy also connects financial services with the country’s broader halal economy. Plans include increasing domestic production of higher-value halal products and developing a halal traceability system that can support exports and re-exports.
Meanwhile, SMEs and technology startups operating within the halal sector are expected to receive greater support. The strategy also identifies halal tourism, modest fashion, Islamic-themed media and wider use of waqf mechanisms as areas for development.
The integration of Islamic finance with these industries could broaden the role of Shari’ah-compliant capital across the UAE economy. Rather than treating Islamic finance as a standalone banking segment, the strategy positions it as part of a wider ecosystem spanning investment, trade, technology and consumer industries.
For customers, the significance lies in greater clarity on Islamic financial products and stronger mechanisms to protect their rights. For banks and investors, clearer rules could provide a more consistent foundation for developing and scaling Shari’ah-compliant financial services.
Ultimately, the UAE’s Dh2.56 trillion target signals an effort to move Islamic finance from a major component of the country’s banking system toward a broader economic platform. With regulation, sukuk, funds, fintech, halal industries and investment infrastructure developing alongside one another, the 2031 strategy could further strengthen the UAE’s position as a global centre for Islamic finance and the halal economy.