The UAE has a strong Islamic banking sector. Here is a complete guide to Islamic banking products available to UAE businesses in 2025.
UAE Islamic Banking Overview
The UAE has both conventional and Islamic banking options. Islamic banking (Sharia-compliant banking) prohibits: charging or receiving interest (riba), financing activities prohibited under Islamic law (gambling, alcohol, pornography, pork products), and speculative transactions (gharar). Instead, Islamic banks use structures that achieve the same commercial results through different mechanisms. UAE’s Islamic banking sector: Dubai Islamic Bank (DIB, largest), Abu Dhabi Islamic Bank (ADIB), Emirates Islamic (part of Emirates NBD Group), and several others. Combined UAE Islamic banking assets represent approximately 20% of total UAE banking assets.
Islamic Business Banking Products
Murabaha (Cost-Plus Financing): Used for: equipment purchase, vehicle purchase, property purchase. Mechanism: the bank buys the asset and resells it to the business at a profit margin (not interest). The business repays the total cost over time. Economically equivalent to a conventional hire-purchase loan, but structured to avoid interest. Ijarah (Leasing): The bank purchases and leases an asset to the business. The business pays lease rentals (not loan repayments). At the end of the lease: the business can purchase the asset (at a nominal value) or return it. Used for: equipment, machinery, commercial vehicles, and property. Musharaka (Partnership Financing): Bank and business co-own the asset (or the project). The business gradually buys out the bank’s share. Profit and loss shared between bank and business. Used for: project finance, property development, joint ventures.