Understanding Islamic banking system
In Judaism, Christianity and Islam renting the use of money is forbidden. Riba or ribbit means the act of renting the use of money at a price called interest rate.
Islamic banking connects to a system of banking activity that is consistent with Islamic law (Sharia’h) principles, called fiqh muamalat (Islamic rules on transactions), and guided by Islamic economics. With the rapid growth of the worldwide economy along with the expanding economy in the Islamic countries, Islamic banking is evolving to play a vital role not only in the Muslim community alone but also in today’s global village.
Islamic law also disallows activities dealing with alcohol, pork, gambling, pornography and anything which Islamic law deems unlawful.