The purpose of this paper is to discuss Islamic banking practices in Bangladesh. It will also cover the roles of Islamic banking in economy as well as in poverty reduction in Bangladesh. This paper is both descriptive and analytical in nature describing the evolution of Islamic banking, its progress and roles in the economy and analyzing trends and performance of Islamic banking in Bangladesh. These are the new issues that deserved exploring. This paper focuses on the different developments of the Islamic banks in Bangladesh. Islami Bank Bangladesh Limited (IBBL) was the first Islamic bank established in 1983 in Bangladesh. The successful operation of IBBL has been acting as an influencing factor for setting up other Islamic banks and Islamic financial institutions in Bangladesh. At present eight (8) full-fledged Islamic banks are operating in the country. This study identifies a strategic element of building organizational capacity and ensuring the congenial financial structure for the financial institutions. The paper initiates to present the practices of Islamic finance in banks in Bangladesh. It also focuses a new issue on the way forward.