The paper begins with a brief history of the efforts of the government and the judiciary towards the introduction of Islamic banking in Pakistan. This is followed by a discussion on a survey undertaken to examine the perceptions of the consumers regarding the Islamic banks and the Islamic methods of finance. Based on the responses from the respondents three hypothesis were tested: one, the respondents consider themselves to have adequate knowledge of the Shariah based banking system; two, banking customers are skeptical regarding the truthfulness about Islamic banking; and three, religion is low in priority with regard to the choice of bank. The hypotheses were tested using Z-tests, and all three of them were accepted. The study is important because the results of the survey are contrary to the accepted wisdom among the people involved in the management of the Islamic Banks.