On October 24, the Ministry of Finance announced the launch of the 'Individual Sukuk' initiative, aimed at enabling citizens and residents to invest in government treasury sukuk compliant with Islamic Sharia law, through the digital channels of several participating banks. The key benefits of investing in these sukuk, as published by the Ministry of Finance on its website and by the three banks that have signed agreements so far, include the ability to invest small amounts with digital ease. The sukuk allow individuals to invest in government treasury sukuk with relatively small financial denominations starting from 4,000 dirhams per operation, which can be multiplied up to 28,000 dirhams, with the possibility of multiple operations. Moreover, opening the investment through digital bank platforms using an Emirati ID or digital identity makes the process easy and accessible. Investing in treasury sukuk offers competitive returns compared to traditional deposits. Treasury sukuk provide a higher return than most bank deposits (reaching up to 3.66% or more), making them an attractive option for saving money for good returns. These sukuk are government-backed as they are linked to government-backed assets, which enhances confidence among individual investors seeking safe and stable investments. Furthermore, their compliance with Islamic law attracts a segment of investors who prefer halal investment instruments. The 'Individual Sukuk' initiative promotes a culture of saving and long-term investing. The initiative is part of the Ministry of Finance's efforts to enhance financial inclusion and encourage individuals to save and invest instead of holding liquidity in low-yield bank accounts. These sukuk are also exempt from tax on investment returns, as well as from any deductions, which is an additional factor that boosts their attractiveness as a saving and investment option. These sukuk also allow for easy tracking and management of investments, as investors can monitor and manage their investments through the banks' digital applications, providing greater convenience and control compared to some traditional investment tools. Since the launch of the initiative, the Ministry of Finance has signed three agreements with three major banks in the country: Abu Dhabi Islamic Bank, Emirates NBD, and Emirates Islamic. The digital platforms of these banks allow investors, citizens, and residents to register electronically using an Emirati ID or digital identity, complete 'Know Your Customer' requirements, create a risk file, and review the terms and details of transactions. Although official data on the number of individual subscribers and the amount of money invested has not yet been published due to the initiative's novelty, general market indicators and the demand for government issuances in the United Arab Emirates suggest a potentially strong interest from individuals, especially given the ease of digital conditions and the low entry threshold. The signing of major banks to implement the initiative in a short period reflects a broad readiness within the UAE's financial system to support individual participation. 'Sukuk' and 'Bonds' Treasury sukuk are Sharia-compliant financial instruments that represent 'ownership shares' in assets or projects used as a source of return. An investor in sukuk does not just lend to the government but owns a part of a real asset that generates a return from profits or rent. They differ from bonds, which represent a debt to the issuer (whether a government, company, or bank), under which a fixed periodic interest payment is made, and then the principal is repaid at maturity. Bonds also do not grant the investor ownership rights in the assets; they are a debt contract.
