Islamic banking is banking or banking activity that is consistent with the principles of Islamic law

Sharia

Sharia law, is the moral code and religious law of Islam. Sharia is derived from two primary sources of Islamic law: the precepts set forth in the Quran, and the example set by the Islamic prophet Muhammad in the Sunnah. Fiqh jurisprudence interprets and extends the application of sharia to...

 (Sharia) and its practical application through the development of Islamic economics

Islamic economics

Islamic economics refers to the body of Islamic studies literature that "identifies and promotes an economic order that conforms to Islamic scripture and traditions," and in the economic world an interest-free Islamic banking system, grounded in Sharia's condemnation of interest...

. Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees (known as Riba

Riba

Riba means one of the senses of "usury" . Riba is forbidden in Islamic economic jurisprudence fiqh and considered as a major sin...

 or usury

Usury

Usury Originally, when the charging of interest was still banned by Christian churches, usury simply meant the charging of interest at any rate . In countries where the charging of interest became acceptable, the term came to be used for interest above the rate allowed by law...

) for loans of money. Investing in businesses that provide goods or services considered contrary to Islamic principles is also Haraam

Haraam

Haraam is an Arabic term meaning "forbidden", or "sacred". In Islam it is used to refer to anything that is prohibited by the word of Allah in the Qur'an or the Hadith Qudsi. Haraam is the highest status of prohibition given to anything that would result in sin when a Muslim commits it...

 (forbidden).