Banky team Reviewed editorial answerA conventional bank works on a system of lending and borrowing at an interest rate fixed in advance (cash financing). An Islamic bank, by contrast, is a commercial and investment intermediary; it does not lend you cash to buy with, it buys the goods itself and takes ownership of them, then sells them to you in instalments at a known profit (Murabaha, a cost-plus sale), or it partners with you in a project (Musharaka, a partnership), and it is bound by all the decisions of the bank's Sharia Board.