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Muslim Started interest free banking under the Islamic law called sharia, and now we all call it Islamic banking. Today that Islamic banking industry showing an average growth rate of 15%-20% annually and comprises around 400 institutions with an asset under management in excess of US $1 trillion, according to Standard & Poor's Ratings Services the potential market is $4 trillion worldwide, therefore this can be a tool for enhancing economic development in India. India is prospering, but Indians are not. On an average, there has been one farmer's suicide every 32 minutes since 2002 because of heavy financial burden.Twenty richest Indians earn as much as what 30 crore poorest people are earning, writes BimalJalan, the former RBI Governor (RAQEEB, 2012). With these two issues, the growing Islamic banking and Indian economic problem, this paper is going to investigate the growth of Islamic banking worldwide and will try to find out how an Islamic banking can benefit Indian society. The paper will try to answer two questions, why Islamic banking is growing & its present status worldwide, how an Islamic banking is beneficial for India and how it can help India in boosting economic development in order to enhance India's world competitiveness.