If a Liberal senator has his way, sharia-style banking should be superseded by the existing financial laws and regulations governing Australia's banking industry as he vowed for a senate initiative that would arrest the growth of sharia-based loans and financial products being offered in the country.

Liberal Senator Cory Bernardi said on Tuesday that sharia-compliant financial services are incompatible with the Australian and way of life as he called on his Senate colleagues to check on any further expansion of the financial products.

The unique banking practice discourages the imposition of interest on any loan transactions guided by the principle that all entities participating in a given financial deal need to absorb the corresponding risks and rewards.

However, the South Australian senator is convinced that the financial products run in counter with the competitive economic environment of the country, stressing that "sharia finance is one aspect of sharia or Islamic law and I reject it entirely."

Senator Bernardi made his calls ahead of the scheduled national taxation consultation summit this week that will tackle ways on imposing taxes on Islamic transactions.

The senator expressed alarm that sharia law may eventually extend its influence beyond the borders of financial concerns as he stressed that "we shouldn't be changing our legal system or our legal framework to accommodate a system of laws that is wholly incompatible with Western values."

He warned that 'over-indulgence' of sharia practices would spawn a parallel system within Australia as he pointed out that "it's like a ball of string that once you start tugging at it, the entire ball becomes unravelled."

Senator Bernardi clarified though that his stand on sharia practices should not be taken as an affront to Australian Muslims as he maintained that people must enter an agreement not influenced by sharia laws but by the laws and frameworks currently in force.

He added that a definite Liberal Party stand on the issue would be formally taken once the Labor-led federal government announces its official policy on sharia financial practices.

However, Finance Minister Penny Wong said that it was unfortunate that the Coalition may be opposing the government's policy on sharia practices, which she maintained carries the potential to graduate into a profitable market that warrants federal attention and policy intervention.

Ms Wong expressed hope though that since Australia has been known for being an open and tolerant society, she is looking forward that "our attitude on this issue could reflect that history."