Islamic banking is based on the principle of profit sharing rather than charging interest.
"The current volume of Islamic banking is USD 1.2 trillion. It is very small and less than one per cent when compared to conventional banking which is nearly USD 243 trillion. But this one trillion was achieved within 40 years.
This is growing 15-20 per cent much faster than conventional banking," expert Madzlan Husain told PTI on the sidelines of 17th Commonwealth Law Conference being held here.
According to him, as many as 75 countries all over the world have recognised the need for Islamic banking and opened doors for it.
The segment constitutes nearly 22 pc of the total banking in Malaysia, which is considered as hub of Islamic banking. It has been growing at nearly 20 pc in countries like countries like Kuwait, Bahrain and Saudi Arabia.
"The number is definitely growing. Recently, India also wallowed Islamic banking in Kerala. The global financial crisis contributed to the growth. They feel that there is something structurally wrong with conventional banking system.
Even countries like China, Korea are also implementing Islamic banking," Husain explained.
Recently, the Kerala High Court paved way for setting up an Islamic bank by dismissing Janata Party leader Subramaniyam Swamy's plea challenging the state government's decision to start an Islamic bank.