The concept of Islamic banking and finance differs fundamentally from conventional western banking and finance. It may shock some to realize that the introduction of Islamic banking and finance means the end bank interest rate.

The world is dominated by the conventional western system. Islamic banking is still in its infancy. But the growing economies of Islamic countries and the wish of Muslims to adhere where possible to Islamic principles have recently led to an increasing interest in Islamic banking and finance.

This has also led to greater efforts to implement Islamic banking not only in Islamic countries but also in the West, often within the conventional banking and financial institutions themselves.

The basic premise of conventional banking is bank interest. We put money in the bank and we expect the bank to pay us some interest while the money sits there. In fact the money is meanwhile being utilised by the bank, a lot of which is lent out, with an interest charge, to various types of borrowers. Bank interest rates have a great effect on our lives, and we anxiously anticipate news of any change in interest rates. They not only affect our deposits, but also our loans.

We borrow for all kinds of purposes, one major purpose being the purchase of a home - mortgages. Mortgage interest rates are a major concern for everyone, and have an impact nationally and internationally, as can be seen in the current problems stemming from the so-called sub-prime mortgages. These problems are not going away soon.

In Islam interest -riba -is prohibited. To those unfamiliar with Islam, that seems a shocking idea. How could one lend or borrow money without interest? What's in it for the lender? And why is it forbidden?

Actually it is not so alien a concept even in the Western tradition. Loan-sharking is clearly a deprecated practice. Usury is condemned in Christianity. It is also condemned in Judaism (save where it is practised against non-Jews). Interest is forbidden because it is a gain not resulting from any expenditure of effort or from any trading or commerce.

Usury is now usually seen as lending at exorbitant interest rates. But this concept is derivative from its meaning simply of interest or lending with interest. In fact there is no real distinction between interest and usury, save that some would try to argue that it is a matter of degree. But probably no one has convincingly shown or justified where such a demarcation line lies.

These are just some very basic introductory remarks. Apart from interest, other activities are also illegal, such as gambling, prostitution, alcohol. The interplay of these considerations lead to the construction of a financial and banking system, that sometimes resemble and sometimes differ significantly from the traditional Western system.