The paper discusses the essence of Muslim banking operations. The first Muslim banks were created in the 1960s. By the end of the next decade, they offered a full range of services.

The essence of Muslim banking operations is the fact that funds loaned or borrowed do not attract interest. According to shariah or the Koranic law, charging interest amounts to usury, which is prohibited. Muslim banks, just like commercial banks in general, focus on their role as intermediaries. Nevertheless, they are considerably different in terms of objectives, forms of operation, relationships with the central bank, methods of settling accounts with customers as well as banking supervision. These differences do not prevent Muslim banks from cooperating, in many forms, with commercial banks.

The activities of Muslim banks can be divided into banking and non-banking operations. Banking operations focus on opening deposit accounts, which is the key source of finance for a Muslim bank. Non-banking operations consist in trade and investment activities, the latter regulated by certain particular principles such as the so-called murahaba, mudaraba, sharaka.

The supervision of how the activities of Muslim banks comply with the shariah principles is exercised by the Legal Canon Council.