Islam is viewed by Muslims as a way of life, where every aspect of life is regarded as worship of God. Thus, Muslims seek guidance from God, through the revelation in the Qur'an and the legacy of the Prophet Muhammad, to conduct their lives. In economic and financial matters also Muslims follow a number of principles as well as some injunctions and prohibitions.

One of the central features of Islamic finance is that riba is categorically prohibited. Thus, based on the riba-interest equation, interest is considered prohibited and all interest-based securities or assets are regarded unacceptable according to traditional Islamic law. There are other prohibitions, such as gharar (excessive uncertainty), maysir (gambling), etc. that govern Islamic finance and business transactions. Also, Muslims are not allowed to invest in or benefit from any product that in itself is prohibited, such as pork, alcohol, gambling, etc.

During the last century, Muslim scholars, who are conversant with Islamic law, have come up with Islamic alternatives to conventional finance, which is now known as Islamic finance. Although full range of services available in conventional institutions are not yet available as part of Islamic finance, yet it can be safely said that during the past three decades, the field of Islamic finance has advanced to the extent that most services the broader Muslim population cares about are in place in various parts of the world.

Guided by several internationally recognized body dealing with Fiqh or Islamic law have standardized many aspects of laws pertaining to finance and banking. For individual contacts or products, most financial institutions serving Islamic clients have supervisory boards consisting of Shariah experts to determine and monitor compliance with the Shariah.

Islamic finance is gaining popularity in the Muslim world as well as among the Muslim communities elsewhere, as it is succeeding in delivering competitive performance while being compliant with the rules and dictates of the Shariah, as interpreted and determined by the contemporary Shariah experts.