Islamic banking system is a banking system guided by the principles of Islamic laws (Sharia). In the Islamic banking system, the most important feature is the prohibition of interest (Riba), regardless of its type or source. Riba is the fixed increase in capital, collected over a fixed period. According to the Quran, in any type of transaction, both the receipt and payment of interest are prohibited. People who deal with the loan of money under three conditions which are the addition of the principal amount or capital, the increase of the additional amount fixed in advance and the transaction conditioned on the two clauses mentioned, consider making Riba. It does not matter how it is used, whether it is for personal need or for a useful purpose or whether the borrower is poor or rich. However, late payment surcharges and trade finance fees are permitted. The prohibition of Riba is to avoid an unbalanced distribution of income in society if interests are involved in the credit system. Risk sharing is another principle of Islamic banking. Although interest is prohibited in the Islamic banking system, it can still operate under the concept of profit and loss sharing which uses the funds at risk. When there is no guarantee of return, people will be encouraged to maximize their efforts to make a justified contribution to the production process. Mudarabah and Musharakah are two most desirable types of forms in the concept of profit and loss sharing. In both forms, the financier makes funds available as an investor rather than as a lender. The funds they invest do not guarantee that they will earn them income, they may need to share the loss in proportion to their share. Under Mudharabah, there will be two parties involved which are...... middle of paper...... the creditor and the debtor. However, regardless of the type of relationship a customer has with an Islamic bank, their relationship will never be that of a debtor and a creditor. For example, under Mudharabah basic, the relationship between a bank and a customer is only that of an investor and an entrepreneur. Furthermore, when investing in conventional banks, for example by saving in a conventional bank for a certain period, the bank must guarantee all its deposits on maturity, even if it loses money in the event of unexpected bankruptcy of his business. However, for Islamic banking, if it is based on the principle of al-wadiah, the Islamic bank will only guarantee deposits for all deposit accounts, but if it is based on the principle of mudharabah, the customer must share the loss if a loss exists. Therefore, Islamic and conventional banks work in a totally different way, even though the service they provide is almost the same..