Economic system is the integral part of every social system. Globalised economy introduces three types of economic systems which are private, public and mixed ownership. Despite people take part of these three systems in major countries, the frequent financial crunches and questioning of reliability on conventional financial system, many countries try to bring an alternative financial system that can consistently work on transparency and accountability in all economic spheres. Islamic economic system is solution of such thinking due to its success and safety operations in all practicing countries.

In GCC countries, all Islamic banks are performing triumphantly which includes 25 banks. Its products and services are based on profit-loss sharing (PLS) mechanisms that adhere to the principles of Islamic shariah. Mudaraba, Musharaka, and Murabaha are the main instruments which are used mostly in all financial sectors. The present system of commercial banking is based on minimization of risk and maximization of profit. On the contrary, Islamic financing is performed as a social financial system so as it is highly attracted by non -Muslim customers also for them that stands as safe and connected to real economy.

Even Islamic Finance is at adolescence stage in its growth in India, its applicability is well subjected overall Indian financial services such as Mutual fund, Microfinance, NBFC based financial system, venture capital etc. The recent launching of Cheraman Financial Services Limited (CFSL) and some movements like SBI Shariah mutual funds elevate this study to introduce an alternative system to those people who suffocate in the knot of Interest.

India has approximately 175 million Muslims, they are highly to be excluded from access to banking products and services due to absence interest free financial services. The gap is prevailing by the lack of mediatory functions like Islamic financial sectors and other investment institutions. The present RBI regulations such as Repo rate, SLR, CRR etc constrain to practicing Islamic banking in India. But excessive demand and working forms like NBFC, NGO, Nidhi etc show the ways to applying Islamic economic system in Indian scenario too.

So the present study focuses to find out feasible models for implementing Islamic economic principles and its practical products and services in India. It is an attempt to analyze the prospects, challenges and drawing solutions to regulatory problems. It also illustrates basic Islamic shariah principles, Indian financial system with reference shariah based financial services. To do research, an exploratory method will be used and data will be collected on secondary basis.