Abstract
Banking industry is essential part of economy which participates in the growth of society in different ways. Islamic banks also have key role in the development of the economy, not just as a bank but also being a source of support as charitable organizations for the betterment of the society, as they have very important segment in their system which is charity fund. In this paper the sources of charity fund of Islamic banking institutions is investigated from Shariah Perspective, which are mainly late payment penalty from customer on the basis of “Nazar” and income derived from Shariah non complaint sources and declared as “Haram” by the Shariah board of the Bank. Views of Shariah scholars and different school of interpretations are discussed. This study also examined the maintenance of charity fund by Islamic banks. It is observed that utilization of fund could be made more effective to achieve the objectives.