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About Islamic Banking

Islamic banking in its primitive stage first began with the worldwide celebration of the advent of the 15th Hijra Century (Islamic calendar) in the mid ‘70s.

In 1974, the world’s first development bank in compliance with the Sharia, the Islamic Development Bank, was established.

Islamic banking, enlightened with the guidance of Islamic Sharia principles, emerged as an alternative financial system that neither gave nor took interest, thereby introducing a fair system of social justice and equality, while fulfilling the financial needs of people and maintaining high standards of ethics, transparency and a sense of responsibility.

It is a banking system in which millions around the world, irrespective of religious beliefs, are putting their faith in. A banking system to which even the world’s leading conventional banks are turning to. A banking system which is governed by a resilient code of ethics in all its practices and functions. And, a banking system where ‘no interest’ is just one of the many aspects you’ll find interesting to follow for your own benefit.

Islamic banking is unique in the way that it helps individuals as well as businesses build tangible and appreciating assets for themselves. This not only leads to prosperity founded on a solid economic base, but also encourages the spirit of entrepreneurship amongst its customers. Islamic banks are based on the unique concept of profit and loss sharing with the customers by way of various Sharia-compliant financing and investment tools.

Islamic banks provide an opportunity to the individuals and the businesses to build various assets which contribute to the development of the economy. Apart from this, the Islamic banks encourage the investment process through adopting innovative Sharia structures in all spheres of the economy, except in a few activities which are considered unethical.

Due to their very nature of complying with the Sharia principles, the Islamic banks are forbidden from indulging in any such practice, which may prove harmful to a customer.

Islamic banking is also the first where a customer, whether individual or corporate, isn't just a customer, but is a partner with the bank or owner of goods or assets. This means they share the risks, as well as the profits of such a partnership or ownership. And this unique arrangement is done in accordance with the laws of Sharia, which ensures complete transparency at all times.

Islamic banking therefore offers a portfolio of innovative, Sharia-compliant financial models that formalize this unique arrangement between customers and the bank. These are Murabaha, Musharaka, Mudaraba, Istisna, Salam and Ijara, to name a few.

And last but not least, Islamic banking is perhaps the only financial system to forbid the use of its finances or services for misleading, dishonorable, immoral and other purposes that would be harmful to society.

Islamic banking spread all over the world. Some of those were: Islamic Finance House in Luxembourg, Dar Al Mal Al Islami in Geneva, American Finance House (LARIBA), Al Baraka Bank, Islamic Bank of Britain, Islamic Investment Bank and Emirates International Islamic Bank in the UK.

After a gap of almost two decades, starting from 1998, the big Islamic banks were established with large capital bases in the Gulf region.

Just visit your nearest RAKBANK Branch to enjoy the Sharia compliant banking experience from RAKBANK Amal.

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