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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Islamic Pawn-Broking Scheme

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.

Most importantly, there is a high chance of loan being approved because this scheme is backed by gold.

At the end of the tenure, your gold will be returned to you as you pay your principal and total safekeeping fee. The introduction of Islamic pawn broking Ar-Rahnu in Malaysia is seen as a new micro credit instrument. Step 2 — Do take note that there is a monthly safekeeping fee. Notify me of new posts by email.

This equates your monthly safekeeping fee to be RM If the borrowers are still pawnbrojing to repay the loan, the pawned item will be auctioned off and oslamic surplus less outstanding amount and charges would be returned to the borrower.

That means that there is a safekeeping fee of RM0. Ar-Rahnu; Islamic pawn broking; Micro credit instrument. In addition, Ar-Rahnu also helps finance educational needs and provides capital to small businesses and entrepreneurs. Compared against conventional pawn shops and unsecured personal loans, Ar Rahnu has certain advantages:.

In Malaysia, Ar Rahnu is a relatively new micro credit instrument. Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated. How Ar Rahnu Works? Borrowers only need pay the principal plus a safekeeping fee as agreed in the agreement during the maturity date.


Please use this identifier to cite or link to this item: Ar Rahnu is based on these Islamic concepts: Isalmic have a choice either to repay either via lump sum or by monthly installments. Only safekeeping fees as agreed will be charged on the pledged item.

Only gold and jewelry made of gold can be pawned.

Islamic Pawn-Broking Scheme –

Where to get Ar Rahnu facilities in Malaysia? In the event the borrower cannot repay the loan, it is possible to be granted extensions of up to 3 months. If you are looking for short term loans and you paenbroking gold jewelry, you can consider Ar-Rahnu as a cheaper alternative to personal loans.

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. Click Here to Leave a Comment Below.

Ar Rahnu is designed to adhere to Islamic laws where borrowers pay a safekeeping fee, as opposed to a compounding interest rate.

Ar Rahnu – Islamic pawnbroking in Malaysia

Notify pawnbriking of follow-up comments by email. This equals to an interest rate of 0. This means that you will receive RM65, of cash. 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 –

Why would anyone go for Ar Rahnu? So far, there are 2 local pawnbrokingg that offers the Islamic pawnbroking scheme. In addition, assets pawned are guaranteed to be kept safely and there is a fair practice in auctioning and bidding. Ar Rahnu is an Islamic Pawnbroking system which allows borrowers pawnbrroking use gold coins or jewellery as collateral. Ar Rahnu is useful for those who need a small loan of at least RM No interest riba involved Interest riba is prohibited in Islam.

Ar Rahnu, also known as Ar Rahn, is Islamic pawnbroking for short-term collateralized borrowing. Ar Rahnu is free from any riba and gharar element. The study employs library and archive research to achieve the objectives of the paper.


Middle East Journal of Scientific Research. Show full item record. It implies that this instrument will help the community to increase economic capability islamci their families.

Pawned items will be in the same condition as before When items are redeemed, there will be no problems such as shorter or lighter pawnnroking 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.

In Malaysia, there are two types of agents that offer Ar Rahnu facilities: Future research should study effective ways in managing challenges faced by Islamic pawn shops.

Therefore, by the end islami 6 months, you will incur a total safe-keeping fee of RM4, It is available to both locals and foreigners, Muslims and Non-Muslims alike, Loan tenures range from months. But if you require a longer term loan with no collateral down, a personal loan might be more suitable. Latest Interest Rates Promotions Newsletter.

This paper aims to provide a review on Ar-Rahnu’s concept and challenges faced by Islamic pawn shops in Malaysia.