Abstract: The main objectives of this paper are to trace the emergence and importance of interest based banking and it impact on socio-economic environment. The impact of interest based banking system was focused and analyzed with best efforts and also tries to define the working mechanism of Interest based system. How interest and banking system affects the society and how it propelled the society to go to hazardous situation? How do the lives of the people get affected by this system due to which so many social evils such as depression, anxiety and even suicide are growing rapidly among the borrowers?