PDF | On Jun 15, , Abdul Ghafar Ismail and others published Ar-Rahnu – Islamic Pawnbroking. Definition of “Islamic Pawn-Broking Scheme”. A Malaysian scheme to provide interest-free loans to clients of small means. The scheme operates through. Introduction. The important of helping the needy especially the poor has long been emphasized in much of Islamic faith. Therefore, lending to.

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Step 2 — Do take note that there is a monthly safekeeping fee. In Malaysia, Ar Rahnu islxmic a relatively new micro credit instrument. So far, there are 2 pawnbroling banks that offers the Islamic pawnbroking scheme. The introduction of Islamic pawn broking Ar-Rahnu in Malaysia is seen as a new micro credit instrument. In the event the borrower cannot repay the loan, it is possible to be granted extensions of up pawnboking 3 months.

Ar Rahnu is useful for those who need a small loan of at least RM Middle East Journal of Scientific Research. This means that you will receive RM65, of cash. How Ar Rahnu Works? However, if the price of gold has increased during the auction, the excess balance after deducting the principal and safekeeping will be refunded to you.

Ar Rahnu – Islamic pawnbroking in Malaysia

Borrowers only need pay the principal plus a safekeeping fee as agreed in the agreement during pawnbrokng maturity date. Ar Rahnu is an Islamic Pawnbroking system which allows borrowers to use gold coins or jewellery as collateral. Only gold and jewelry made of gold can ispamic pawned. Ar Paenbroking is based on these Islamic concepts: Why would anyone go for Ar Rahnu?

Please use this identifier to cite or link to this item: Do take note that if you fail to pay your principal and the safekeeping fee, the bank has the right to auction off your gold. In addition, Ar-Rahnu also helps finance educational needs and provides capital to small businesses and entrepreneurs. Future research should study effective ways in managing challenges faced by Islamic pawn shops.


Pawwnbroking you are looking for short term loans and you have gold jewelry, you can consider Ar-Rahnu as a cheaper alternative to personal loans. It implies that this instrument will help the community to increase economic capability of their families. At the end of the tenure, your gold will be returned to you as you pay your principal and total safekeeping fee.

This paper islzmic to provide a review on Ar-Rahnu’s concept and challenges faced by Islamic pawn shops in Malaysia. This equates your monthly safekeeping fee to be RM But if you require a longer term loan with no collateral down, a personal loan might be more suitable. That means that there is a safekeeping fee of RM0. Notify me of new posts by email. Latest Interest Rates Promotions Newsletter. Ar Rahnu is designed to adhere to Islamic laws where borrowers pay a safekeeping fee, as opposed to a compounding interest rate.

Show full item record. Ar Rahnu is free from any riba and gharar element. Most importantly, there is a high chance of loan being approved because this scheme is backed by gold.

If the borrowers are still unable to repay the loan, the pawned item will be auctioned off and any surplus less outstanding amount and charges would be returned to the borrower. Pawned items will be in the same condition as before When items are redeemed, there will be no problems such as shorter or lighter gold chains, which can sometimes happen with conventional pawn brokers Notice of Auction If the borrower is unable to repay the debt, they will be notified of the charges and about the forced sale Surplus will be returned If the sales price exceeds the remaining debt, the excess will be returned Reasonable pawn value Although the Pawnbroker Act did not fix the par value or criteria to appraise the pawned item, one can still expect a reasonable pawn value from institutionalized pawn brokers Conclusion If you are looking for short term loans and you have gold jewelry, you can consider Ar-Rahnu as a cheaper alternative to personal loans.


Ar Rahnu, also known as Ar Rahn, is Islamic pawnbroking for short-term collateralized borrowing.

Items in DSpace are protected by isoamic, with all rights reserved, unless otherwise indicated. The study employs library and archive research to achieve the objectives of the paper.

Compared against conventional pawn shops and unsecured personal loans, Ar Rahnu has certain advantages:. Only safekeeping fees as agreed will be charged on the pledged item.

Borrowers have a choice either to repay either via lump sum or by monthly installments. Where to get Ar Rahnu facilities in Malaysia?

In addition, assets pawned are guaranteed to be kept safely and there is a fair pwnbroking in auctioning and bidding. The Islamic pawn broking have several advantages over conventional pawn broking because it provides a cheaper way to obtain financing and is free from interest. Click Pasnbroking to Leave a Comment Below. Notify me of follow-up comments by email. Therefore, by the end of 6 months, you will incur a total safe-keeping fee of RM4, Ar-Rahnu; Islamic pawn broking; Micro credit instrument.

Ar Rahnu – Islamic Pawnbroking

No interest riba involved Interest riba is prohibited in Islam. This equals to an interest rate of 0. In Malaysia, there are two types of agents that offer Ar Rahnu facilities: It is available to both locals and foreigners, Muslims and Non-Muslims alike, Loan tenures range from months.