Dubai: Dubai Holding is set to launch Al Noor Islamic Bank (ANIB), with a capital of Dh3.6 billion, to be headed by Hussain Al Qemzi, former chief executive of Sharjah Islamic Bank.
ANIB will be one of the two new Islamic banks that will start operations in the UAE early next year.
Dubai Bank, launched in 2002, will turn Islamic from January next year, joining four others - Dubai Islamic Bank, Abu Dhabi Islamic Bank and Emirates Islamic Bank.
These will increase the number of Islamic banks to seven by next year.
The number of entities following Sharia principles is growing as some conventional banks are either seeking conversion or have plans to launch Islamic banking subsidiaries.
"In the next 10 years, the Islamic banking sector could surpass conventional banks in business volume in the country," Mohammad Abdullah, chief executive of Sharjah Islamic Bank (SIB), said yesterday.
"There is a big demand in the market for Islamic banking activities," Abdullah said.
According to the International Monetary Fund's Middle East director Mohsin Khan, Islamic financial institutions have up to $300 billion under management globally.
Speaking at a media briefing in Dubai yesterday, he said Islamic banking products were gaining in popularity due to their economic benefits for customers.
Rapid growth of Islamic banking has created a need for dedicated laws to govern the sector in the UAE, SIB chief operating officer Ahmad Saad Ebrahim told Gulf News.
"With the increase in the number of Islamic banks, there is a need for a set of rules dedicated to Islamic banks. The nature of some transactions is different, the nature of risk is different," he said.
Depositors are considered like shareholders in Islamic banks and unlike the conventional banking system there is participation in risk by account holders.
SIB officials said they expect the UAE Central Bank to look at developing new Islamic banking laws to cover an expanding range of products.