ISLAMIC BANKING industry is a very different industry compared to the banking sector we see these days
. This type of Banking is totally based upon the principles of Islamic law which is also known as Sharee'ah in Arabic. This style of banking industry follows the Islamic economics and it forbids the involvement of interest. The Interest in the Islamic principle is strictly prohibited and is considered as Haraam (forbidden). Many banks in Muslim and non-Muslim countries follow Islamic banking, the Islamic banking sector has experienced a boom in the late years of 20th century.
Islam terms interest as "Riba" (vigorish), and all the products introduced by Islamic Banks are Riba-Free that means that it does not involve interest neither in payments nor on loans. The main concept of this type of baking is that a particular amount of service charged should be charged from the person who is experiencing the banking service, but interest is something should not be applied at any stage in any Islamic Banking Product.
Several financing activity concepts were developed during the early stages of Islamic Banking; these include different forms of partnerships "mufawada" which is the first form of partnership, "mudaraba" limited form of partnership and "al-mal" capital investments. Many of these financial concepts that were developed in the Islamic banking stages are still in practice in popular non-Islamic banks.
Many Muslims are reluctant to invest their money because of the concept of Interest is prohibited in Islam and therefore this type of banking is important in catering the needs of this important segment of the market in both Islamic countries as well as non-Islamic countries. As this style of banking offers a lot more to all its customers therefore it has been gaining popularity not only in the Islamic region but in the non Islamic regions as well.