The Economic system of Islam is very balanced one. Islam does not deprive a person to take benefit of all halal (permissible) things, while it has banned all illegal means of earning like deceit, corruption, gambling, etc. Among all evils, interest/usury is the worst form of earning and those who are involved in transactions based on it, they have been threatened with hell. While on the other hand, in most banks and other financial institutions, transactions are carried out on the basis of interest. This is why Muslim scholars worked out alternative modes based on Islamic financing to replace interest-based transactions. In this article six modes of financing i.e. Musharakah., Mudharabah, Murabahah, Ijarah, Salam and Istisnah have been discussed. If these Islamic modes of financing are adopted in banking sector and in other financial institutions ,then it is hoped that in a very short span of time elimination of riba would be possible.