Islamic Banking principles describe money act as potential capital

Islamic banking operates are based on moral and ethical principles, which are aimed to promote the public good.

In Islam, money is not capital, but it is a form of potential capital, which requires the services of an external party (businessman) to convert it into productive use.

Hence the idea of getting interest on money is unaccpetable in Islam banking. They believe that money should be put to productive use and a risk has to be under-taken to deserve a return. Those returns must not be fixed regardless of the profits.

Hence a fixed interest rate irrespective of the profitability of the bank does not come to the question.

They believe that a person who abstains from consumption and saves should not be rewarded for that act. They should only be rewarded if those savings are converted into a productive investment, which can then justify a return.