Bait-ul-Mal is an Arabic term that is translated as "House of Money" or "House of Wealth." Historically, it was a financial institution responsible for the administration of taxes in Islamic states, particularly in the early Islamic Caliphate. It served as a royal treasury for the caliphs and sultans, managing personal finances and government expenditures.
In the time of Hazrat Umar things changed. With the extension in conquests money came in larger quantities, Hazrat Umar also allowed salaries to men fighting in the army. Abu Huraira who was the Governor of Bahrain sent revenue of five hundred thousand dirhams. Hazrat Umar summoned a meeting of his Consultative Assembly and sought the opinion of the companions about the disposal of the money. After consultation Hazrat Umar decided to establish the Central Treasury at Madinah. Abdullah bin Arqam was appointed as the Treasury Officer. He was assisted by Abdur Rahman bin Awf and Muiqib. A separate accounts department was also set up and it was required to maintain record of all that was spent.