The role of banking is very important not now but very ancient time. In recent years a new alternative in banking has emerged at the global platform- interest free/ Islamic banking. In India various high committees have observed a voluntary faith based financial exclusion and recommendation interest free banking is a possible solution. The study seeks to inquire into the working of interest free and examine their prospectus in the light of India’s legal and regulatory frame work. The study will seek to find out major steps taken by India for introducing interest free banking.