In the early period Islamic merchants were indispensable middlemen for trading and business activities.Even. All the previous references of mercantile activities were in the motive of "interest-free" system. The Muslim population is expected to be over 2.6 billion or over 26% of the projected world population of 10 billion by the year 2050. In the 21st century every fourth people would be a Muslim, to explore the potential of economic system in line with Islamic laws where interest (Riba) is prohibited. The present study emphasizes the implementation of Islamic Banking in India. An attempt has been made to study the divergence between the operational aspects of conventional (Western) banking versus Islamic banking. The study identifies that the principles and concepts of Islamic banking which promotes the concept of entrepreneurship and eliminates the default risk in credit. In Islamic Banking entrepreneurs are getting beneficiaries by mutual relationship of risk sharing, financial support. It leads to better performance of entrepreneurs. Islamic banks are expected to be more ethical comparing to western banking, reason being investment methodology selection is subjected to the prohibitions of Islamic laws. Islamic banking seems to be a better management technique for inflation control in India. The study has also made suggestions for various important components like feasible financial structure instruments, the expert panel and advisory board .