Islamic banking is banking or banking activity that is consistent with the principles of Islamic law (Shariah) and its practical application through the development of Islamic economics. Shariah prohibits the fixed or floating payment or acceptance of specific interest or fees (known as Riba or usury) for loans of money.
Investing in businesses that provide goods or services considered contrary to Islamic principles is also Haraam (forbidden). While these principles were used as the basis for a flourishing economy in earlier times, in the late 20th century that a number of formal Islamic banks were formed to apply these principles to private or semi-private commercial institutions within the Muslim and Non-Muslim Communities………………………………………..Full Article: Source