The practice of interest free banking is still a novelty in Nigeria. A lot of people have heard about it, but most do not really know what it is all about. Interest free banking evolved as a result of Islamic view about money that it should not be priced as it is done by Western or conventional banks operating around the world.According to Ahmed (1983), the only way money can not be priced is the removal of pre-determined and fixed interest rate on lenders and borrowers, irrespective of the outcome to which the money is used.Theoretical discussion on interest free banking began in Pakistan in the forties and therefore predated the Middle Eastern oil boom by decades. In the pre interest-free banking days, banking in the Islamic communities in the world was totally based on the capital economic system where interest is paid on loans and given on deposits which tended towards profit seeking goals. Money lenders were thus exploiting the poor by charging various interest rates. Interest free banking is variously known as Non-interest banking, Islamic banking and Profit and loss sharing banking.