what is Islamic Banking VS Conventional Banking And how does it works

The difference between Islamic banking and conventional banking lies primarily in the principles that guide their operations. Islamic banking operates according to Sharia law,

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which prohibits the payment or receipt of interest (riba) and promotes ethical investments. It uses profit-sharing and risk-sharing models, such as mudarabah and musharakah, instead of charging interest on loans. In contrast, conventional banking is based on interest-driven transactions, where banks charge interest on loans and pay interest on deposits.

The conventional account meaning and definition typically refer to accounts where interest is earned on deposits or charged on loans, a practice that Islamic banking avoids to ensure compliance with Islamic principles.

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Institute of Islamic Banking and Finance
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Certified Islamic Banker (CIB)
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Master Diploma in Islamic Finance (MDIF)
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