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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It implies that this instrument will help the community to increase economic capability of their families.

Islamic Pawnbroking (Ar-Rahnu) | KAPB

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. Where to get Ar Rahnu facilities in Malaysia? 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. The islmaic employs library and archive research to achieve the objectives of the paper. Why would anyone go for Ar Rahnu?

This paper aims to provide a review on Ar-Rahnu’s concept and challenges faced by Islamic pawn shops in Malaysia. In addition, Ar-Rahnu also helps finance educational needs and provides capital to small businesses and entrepreneurs.

Islamic Pawnbroking (Ar-Rahnu)

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. Only gold and jewelry made of gold can be pawned. Borrowers have a choice either to repay either via lump sum or by monthly installments. Therefore, by the end of 6 months, you will incur a total safe-keeping fee of RM4, In the event the borrower cannot repay the loan, it is possible to be granted extensions of up to 3 months.

This equals to an interest rate of 0. Ar-Rahnu; Islamic pawn broking; Micro credit instrument. Ar Rahnu is designed to adhere to Islamic laws where borrowers pay a safekeeping fee, as opposed to a compounding interest rate. Ar Rahnu is an Islamic Pawnbroking system which allows borrowers to use gold coins or jewellery as collateral. At the end of the tenure, your gold will be returned to you as you pay your principal and total safekeeping fee.


No interest riba involved Interest riba is prohibited in Islam. Ar Rahnu is based on these Islamic concepts: Ar Rahnu is free from any riba and gharar element. That means that there is a safekeeping fee of RM0. Step 2 — Do take note that there is a monthly safekeeping fee. Middle East Journal of Scientific Research.

Ar Rahnu is useful for those who need a small loan of at least RM Notify me of new posts by email. Notify me of follow-up comments by email.

Only safekeeping fees as agreed will be charged on the pledged item.

Islamic Pawn-Broking Scheme –

It is available to both locals and foreigners, Muslims and Non-Muslims alike, Loan tenures range from months. Most importantly, there is a high chance of loan being approved because this scheme is backed by gold.

Latest Interest Rates Promotions Newsletter. But if you require a longer term loan with no collateral down, a personal loan might be more suitable. This equates your monthly safekeeping fee to be RM Ar Rahnu, also known pawnbroklng Ar Pawnbrlking, is Islamic pawnbroking for short-term collateralized borrowing.

This means that you will receive RM65, of cash. So far, there are 2 local banks that offers the Islamic pawnbroking scheme.

Ar Rahnu – Islamic pawnbroking in Malaysia

In Malaysia, there are two types of agents that offer Ar Rahnu facilities: Pawned items will be in the same condition as before When items are redeemed, there will be no problems such as shorter or pawnbroiing gold chains, which can sometimes happen pawjbroking conventional pawn brokers Notice of Auction If the borrower is unable to repay the debt, pawnbfoking 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.


Show full item record. If you are looking for short pawnbroling loans and you have gold jewelry, you can consider Ar-Rahnu as a cheaper alternative to personal loans.

In Malaysia, Ar Rahnu is a relatively new micro credit instrument. The introduction of Islamic pawn broking Ar-Rahnu in Malaysia is seen as a new micro credit instrument. Click Here to Leave a Comment Below.

Pawnbrooking addition, assets pawned are guaranteed to be kept safely and there is a fair practice in auctioning and bidding. Borrowers only need pay the principal plus a safekeeping fee as agreed in the agreement during the maturity date. Future research should study effective ways in managing challenges faced by Islamic pawn shops.

Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated. Compared against conventional pawn shops and unsecured islamoc loans, Ar Rahnu has certain advantages:. 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.

How Ar Rahnu Works?

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