UAE’s Commercial Transactions Law will boost Islamic financial services: UBF

UAE Banks Federation, the representative of UAE banks, has said that the Commercial Transactions Law 2022, which was issued by decree of the UAE’s President Sheikh Mohamed bin Zayed Al Nahyan, will boost Islamic financial and banking services, and strengthen the country’s position as a global financial centre.

The law, of which Chapter VI is singled out for commercial transactions of Islamic financial institutions, provides a comprehensive and advanced legislative framework for banking transactions that are compliant with the provisions of Islamic Sharia.

It is considered the first of its kind in addressing Islamic financial and banking transactions.

It has 25 articles that define the concepts and financing formulas, deposits, investment accounts, Takaful insurance, investments and other transactions that are subject to the provisions of Islamic Sharia in a detailed and accurate manner.

Abdul Aziz Al-Ghurair, chairman of UBF, said: “The Federal Law for Commercial Transactions 2022 confirms the futuristic and comprehensive vision of our wise leadership, which has contributed to reaffirming the UAE’s position among the most prominent economic and financial centers in the world.

“Financial and banking services that are in compliance with the provisions of Islamic Sharia are among the sectors that have found great interest in the UAE and have witnessed remarkable development over the past years under the wise guidance and oversight of the Central Bank of the UAE (CBUAE).”

He added: “UAE Banks Federation places the development of Islamic banking services among its top priorities. Under the direct supervision of the CBUAE, UBF has contributed to supporting Islamic financial institutions as part of its efforts to represent member banks in the federation and the banking sector.”

The statistics of the CBUAE reflect the significant growth of Islamic banks operating in the country, as their assets exceeded Dhs600bn by the end of the first half of 2022, and their bank credit facilities increased to Dhs395.4bn, an increase of 2.1 per cent compared to the same period in 2021, deposits rose to Dhs430.7bn, and the total investments of Islamic banks amounted to Dhs95.4bn by the end of June 2022.

Jamal Saleh, director general of UAE Banks Federation, added: “The UAE continues to consolidate its economic position regionally and globally by setting and developing the frameworks and foundations to maintain this high rank. The issuance of the Commercial Transactions Law 2022 comes in this context as it meets the requirements of the rapid developments of Islamic financial services.”