Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
The UAE’s Ministry of Finance (MoF) has launched the Retail Sukuk programme, allowing small individual investors to buy Shariah-compliant government bonds with investments starting from as little as Dh4,000. The move is widely viewed as a milestone in the UAE’s financial landscape — one that strengthens the dirham-denominated debt market, encourages savings, and expands financial inclusion.
Experts say the initiative not only enhances access to sovereign-backed assets but also represents a strategic step toward building a more balanced investment culture among residents. “This is a momentous step forward not only in the UAE’s capital markets but also in its savings culture,” said Vijay Valecha, Chief Investment Officer at Century Financial. “It gives retail investors access to higher-quality sovereign assets denominated in dirhams, advances Sharia-compliant options, and nurtures a domestic debt capital market.”
Valecha noted that the programme aligns with the UAE’s broader objective of promoting a “culture of savings” and diversifying investment beyond real estate or ad-hoc consumption. He cautioned, however, that investor education will be essential, especially on liquidity and market-value fluctuations, given that sukuk differ from traditional fixed deposits.
He added that retail sukuk offer higher returns — averaging between 4–5% — compared to most bank fixed deposits, which range from 2–3%. “Fractional treasury sukuks give higher returns and are more liquid than traditional fixed deposits, making them an ideal choice for retail investors,” he said.
On the banking sector, Valecha said the initiative would boost liquidity and deepen customer engagement. “Such halal investment opportunities will likely unlock cross-selling of wealth management and other services,” he said. As the sukuk are distributed through digital channels, banks will also be encouraged to improve their platforms and digital offerings, aligning with the UAE’s vision to expand the Islamic financial ecosystem. “The banks could increase revenues via fees from subscriptions, platform access, and trading commissions, directly impacting the bottom line through non-interest income.”
Given the large expatriate population in the UAE, Retail Sukuk could encourage residents to keep their earnings within the country by investing locally rather than remitting them abroad, Valecha noted. He added that about 92.1% of Fitch-rated UAE sukuk are investment grade, underlining their strong credit quality.
Echoing this, Milad Azar of XTB MENA said the retail sukuk initiative “marks a significant step toward financial inclusion,” adding that it “deepens the domestic debt market, diversifies funding sources, and supports the government’s vision to strengthen savings culture and economic stability.”
Azar observed that while banks could initially experience liquidity shifts as savers move some funds from deposits to sukuk, “a more active debt market ultimately enhances liquidity management tools and reduces funding pressure on banks.” He added that fractional sukuk are tradeable and can compete with fixed deposits by offering comparable or higher returns — though they carry market risk unlike fixed deposits.
He said the initiative could “redefine savings behaviour by channeling household funds into productive national investments.” If supported by digital access and transparent pricing, he added, it could become a cornerstone of public finance and make the UAE “a regional sukuk innovation hub.”
Samer Mardini, Chief Investment Officer at a Dubai-based family office, described the launch as “a great move by the UAE,” saying it allows individuals “to invest safely while deepening the local market and supporting financial inclusion.”
“Banks benefit because they’ll earn fees by distributing these sukuk and gain more high-quality liquid assets,” Mardini said. “Some deposits might move out, but overall, it strengthens the system.”
He added that the returns — around 3.6 to 4% — are “close to or even a bit better than most fixed deposits,” with sukuk offering the added advantage of being government-backed and tradable in the secondary market.
Experts also noted that similar retail sukuk programmes in countries such as Malaysia, Indonesia and Saudi Arabia have been highly successful, promoting disciplined savings and strengthening domestic capital markets.
Valecha recounted several success stories of domestic retail sukuk programs. Malaysia’s Sukuk Prihatin, which was launched on August 18, 2020, with a minimum investment of RM500, was oversubscribed and fully redeemed in 2022, following strong retail participation. Indonesia’s Retail Sukuk (SR) series has consistently drawn billions in subscriptions since its launch in 2009. Saudi Arabia’s SAH retail savings sukuk, which was rolled out in 2024 under Vision 2030, has also seen robust uptake across its pilot and regular tranches.
The UAE’s rollout, experts are unanimous, is both timely and strategic — reinforcing its position as a regional leader in ethical, accessible, and Sharia-compliant investment innovation.
