Guided by the Sharia laws Islamic banking is grounded on the
laws on the belief that all types of interest is forbidden.
Investing in businesses that deal in business of pork or alcohol
or those that lead to gossip such as media or are against
Islamic values such as pornography is completely prohibited.
Speculative transactions are also banned in this law. Because of
a different way of running their financial system the regular
banking financial instruments cannot be used in Islamic
banking.
However, the banking and finance in Islam do have the same
motive as the conventional banking which is to generate money
for the banking organisation which is by lending capital while
also keeping within the boundaries outlined by the Islamic law.
Instead of the basic principle which the conventional banks use
that is transfer of risk the Islamic banks follow the principle of
risk sharing.
The laws of Sharia vary from country to country. While in
some countries they are liberal in other places they follow the
exact interpretation of Sharia laws.