The information published on the principles of Islamic banking and finance and their applications is increasing day by day. Pakistan is one of the 57 Islamic countries with a total population of over 170 million and where the majority of the population practices Islam. Measures to Islamize the banking sector in Pakistan were initiated in 1977-78. The removal of interest from the operations of specialized financial institutions took place in 1979 and of commercial banks between 1981 and 1985. Commercial banks in Pakistan are required to accept all interest-bearing deposits and all deposits are processed on the basis of sharing profits and losses since 1985. Islamic banking is defined as a banking system in accordance with the ethics and value system of Islam and is governed by the rules and regulations directed by Sharia'h. The main sources of Sharia'h are the Quran, Hadith, Sunnah, Ijmah, Qiyas and Ijtehad. According to Islamic Sharia, interest (Riba) is prohibited i.e. institutions are not allowed to offer a fixed rate of return on deposits and they are also not allowed to charge interest on loans, income and investments in all unethical economic activities like investment. in gambling, pork, alcohol, etc. are prohibited (Ayub, 2008). Financial activities in Islam are a real asset supported by the capacity to generate added value. The most commonly used Islamic banking instruments in Pakistan are Mudaribah, Musharikah, Murabaha, Ijarah, Bai-Muajjal and Bai-Salam. This study will help the researcher to know the awareness of Islamic banking culture as well as the attitude towards Islamic banking in Pakistan. Background of the Study Islamic banking has been a widely studied area since the 1970s. Islamic banking was introduced in Pakistan in 1977-78. Elimination of interests from operations of the species...... middle of paper ......ce, G. (1999). Islamic ethics and its implications for business. Journal of Business Ethics, 18 No. 4, 345-358 Sources of Islamic law. (nd). Wikipedia. Retrieved February 27, 2010 from http://en.wikipedia.org/wiki/Sources_of_Islamic_law State Bank of Pakistan. (2009). Islamic Banking Bulletin. Islamic Banking Bulletin, 4 No. 3, 1-21 Usmani, MT (1998). An introduction to Islamic finance. Karachi: Idaratul Ma`arif. Usmani, MIA and Zubairi, Z. (2002). Meezan Bank Islamic Banking Guide. Retrieved February 26, 2010 from http://www.meezanbank.com/pages.aspx?iPageID=177 Venardos, AM (2005). Islamic banking and finance in Southeast Asia: their development and future. Singapore: World Scientific Publishing Company, Incorporated. ISBN: 9789812561527 9789812569394 Zaher, TS and Hassan, MK (2001). . Financial markets, institutions and instruments, 10 No. 4, 155-199