Monday, November 20, 2017 - 2 Rabi' al-Awwal 1439
Home » Fatwas » Financial Transactions » Modern Transactions

What is the difference between western banks and Islamic banks?

Asalam alikum warahmato Allah wabarakato
I had a discussion with someone regarding usury and Islamic banking, and wish to provide detailed information on the questions below. I would be very grateful if you can help me. He seemed convinced that all banks are the same.
What is the difference between western banks and Islamic banks?
- How do Islamic banks work?
- How do Islamic banks make profits, pay their employees if interest/Riba is not used?
- Is it true that Islamic banks also charge riba/or form of riba? And that riba can't be avoided since these banks deal with other banks?
- Is it true that the Islamic banking of Britain was found to use riba?
- What was the cause of the downfall of some western economies?
- How can I convince someone that Islamic banking is different from western banking?
Apologies for my many questions, I want to be able to answer these questions when I am asked, so I am able to defend Islam.
Jazakum Allahu Khayran.


It is permissible for a Muslim to deposit his money in any bank that fulfills his needs. The interests generated on deposited money are generally lawful [halal]. It is likewise permissible to deposit money in a bank that engages with usury [riba] in a non-Muslim country. This is because according to the opinion of Hanafi scholars, it is permissible in Islamic law to engage in corrupt contracts in non-Muslims countries.

Related links
» Benefitting from Interest
» Is it lawful to receive bank interests?
» Purchasing an apartment through a bank
» Is it permissible to obtain mortgage (loan) in UK?
» Is banking interests for accounts is Halal or not.. if so which type is halal?