The United Arab Emirates has brought in a single, detailed rulebook for Islamic finance. Central Bank Regulation No. 1/2026, which puts parts of Federal Decree-Law No. 50 of 2022 into effect, sets out common principles for almost every Shariah-compliant product sold in the country, from home finance and car finance to deposits, investment accounts and takaful. Legal experts say Islamic banks and their clients may now need to review existing contracts.
Who the new rules apply to
According to reporting by FinTech Global and law firm Pinsent Masons, the regulation covers:
- Islamic banks and Islamic finance companies
- Conventional banks that run Islamic “windows”
- Takaful and retakaful operators
- Companies and project sponsors that borrow through Islamic structures, and investors in Shariah-compliant deals
Which products are covered
The breadth of the regulation is what stands out. It addresses murabaha (cost-plus sale), ijarah (leasing), salam and istisna’a (forward and manufacturing sales), mudaraba and musharaka (profit-sharing partnerships) and wakala (agency), as well as Islamic deposits, investment accounts, guarantees, documentary credits and takaful. Pinsent Masons’ Islamic finance specialist Seya Rahnema described it as an important development, noting how far it codifies principles that apply across different forms of Islamic finance.
Because the rules are so wide, firms may need to check whether their documentation, governance processes and compliance frameworks need updating, and the firm expects many will seek legal advice. The reports did not give a specific deadline or transition period.
Part of a wider tightening of Shariah governance
The move fits a longer trend in the UAE. Under the country’s banking law, resolutions of the Higher Shari’a Authority at the Central Bank are binding on Islamic financial institutions and their internal Shariah committees. Earlier this year, the Dubai Financial Services Authority also widened its Islamic Finance Rules to bring more Shariah-compliant securities offerings and Islamic funds in the DIFC under its supervision.
What it means for ordinary customers
For Muslims in the UAE, and for Indian and Pakistani expatriates who bank there, common rules should make Islamic products more consistent and easier to compare. A murabaha home finance or an ijarah car finance from one bank should follow the same core principles as another’s. If your bank sends updated terms in the coming months, read them carefully, especially clauses on late-payment charges, early settlement and how profit is calculated, and ask the bank’s Shariah department if anything is unclear.
The Quran draws a clear line between trade and riba: “Allah has permitted trade and forbidden interest” (Surah Al-Baqarah, 2:275). Clear rules that keep Islamic products genuinely different from interest-based loans support that principle.
Key details
- Rule: Central Bank Regulation No. 1/2026
- Legal basis: Federal Decree-Law No. 50 of 2022
- Covers: banks, Islamic windows, takaful/retakaful, corporate users and investors
- Products: murabaha, ijarah, salam, istisna’a, mudaraba, musharaka, wakala, deposits, takaful and more
New to Islamic finance? Start with our Halal Money guides, including Halal Investing for Beginners and Is a Savings Account Halal?
Sources: FinTech Global (November 13, 2026); Pinsent Masons Out-Law. This article is general information, not financial or legal advice.
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