I would like to avail this opportunity to clarify an important aspect before I delve into the main theme that Islamic Banking, based on the Islamic Economic System, is not restricted to Muslims only. The objective of Islamic injunction is welfare of the whole-humanity.

The world has seen in the last three decades the emergence of a new academic discipline, Islamic banking. It is based on the ethical and moral code of conduct, enshrined in the Shariah, which urges replacement of Riba (usury), financing by profit-and-loss sharing arrangements and prohibit financing in the firms active in the manufacture and/or sale of forbidden (Haram) products.

However, Western media has frequently suggested that Islamic banking in its present form is a recent phenomenon, but in fact, the basic practices and principles date back to the early part of the seventh century.

It is evident that Islamic finance was practiced predominantly in the Muslim World throughout the Middle Ages, fosteril1g trade and business activities. In Spain and the Mediterranean and Baltic States, Islamic merchants, became indispensable midd1e men for trading activities.

In the pre-IsIamic period 'all financial resources were mobilized on the basis of either interest or some sort of profit\loss sharing arrangement. Islam prohibited all dealings based on interest but allowed the continuance of the system of profit and loss sharing which were predominantly in use in the pre-Islamic period known as Mudaraba and Musharaka.

The revival: why?

The revival of Is1amic banking coincided with the advent of the 15th Century of Islamic calendar in 1976 and the boost of resources of Muslims, particularly those of the oil-producing countries, resulting from the rationalization of oil prices. These events led Muslims to strive to model their life in accordance with the ethics and philosophy of Islam.