According to annual report on Islamic finance of the UAE Central Bank, the UAE ranks fourth globally among major Islamic finance markets by asset size.
The report highlights significant growth in the sector throughout 2022.
Mentioning that the global Islamic financial assets reaching AED 16.5 trillion (USD 4.5 trillion).
The UAE’s position as a leading center for Islamic finance can be attributed to:
- Its robust regulatory environment
- Substantial presence of Islamic financial institutions
- Diverse range of Islamic financial products and services.
Sector Growth and Focus on Sustainability:
Islamic finance sector grew by 11% in 2022.
While global Islamic financial assets reached AED 16.5 trillion (USD 4.5 trillion).
Islamic finance sector increased by 69% over 5 years and 163% over the past decade.
This is due to the increased emphasis on initiatives aligning with Sharia requirements.
Which enhance stability and growth of Islamic finance and foster an environment for innovative offerings.
Islamic finance plays a key role in global sustainability due to its compatibility with Sustainable Development Goals.
UAE Central Bank Initiatives:
- Integrating sustainability standards into reserve management.
- Supporting digital transformation in the financial system.
- Internal transition towards sustainability.
- Conducting climate risk stress tests.
- Commencing supervision of climate-related financial risks.
- Closely monitoring sustainability standards in the financial sector.
- Launching principles for effective management of climate-related financial risks.
- Developing the sustainable Islamic finance sector.
🇦🇪🇮🇳 #UAE and #India issue a joint statement concluding PM Narendra Modi’s visit. discussions during the World Government Summit. Both nations celebrate strengthened ties, signing agreements in investment, economic corridors, digital infrastructure, maritime heritage, and more. pic.twitter.com/OMb9uUiZeQ
— UAE Voice (@uae_voiceeng) February 17, 2024
Role of the Higher Sharia Board:
- Encouraged Islamic financial institutions to actively participate in sustainable finance.
- Issued guiding principles on sustainable Islamic finance in 2023.
- Emphasized the Sharia basis and juristic methodology for integrating sustainability into Islamic finance.
- Added 10 requirements and recommendations for sustainable Islamic finance.
The Sustainable Islamic Finance Questionnaire revealed that 79% of Islamic banks and Islamic banking windows in conventional banks have a sustainability strategy.
While 74% of them reported having their strategy approved by the board of directors.
The Islamic finance sector in the UAE is experiencing significant growth with a growing focus on sustainability.
Due to the initiatives of the UAE Central Bank and the Higher Sharia Board.
These initiatives play a crucial role in strengthening and developing this sector.
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