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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Middle East Journal of Scientific Research. That means that there is a safekeeping fee of RM0. Compared against conventional pawn shops and unsecured personal islaimc, Ar Rahnu has certain advantages:. Latest Interest Rates Promotions Newsletter.

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? Only gold and jewelry made of gold can be pawned.

This equates your monthly safekeeping fee to be RM This means that you will receive RM65, of cash. But if you require a longer term loan with no collateral down, a personal loan might be more suitable. In addition, assets pawned are guaranteed to be kept safely and there is a fair practice in auctioning and bidding.

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 is an Islamic Pawnbroking system which allows borrowers to use gold coins or jewellery as collateral. 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.

In Malaysia, there are two types of agents that offer Ar Rahnu facilities: Therefore, by the end of 6 months, you will incur a total safe-keeping fee of RM4, 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.

No interest riba involved Interest riba is prohibited in Islam. Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.

At the end of the tenure, your gold will be returned to you as you pay your principal and total safekeeping fee.

Islamic Pawn-Broking Scheme

Ar Rahnu is based on these Islamic concepts: If the borrowers are still unable to repay the loan, the pawned item will be auctioned off and any surplus islamiic outstanding amount and charges would be returned to the borrower.


This paper aims to provide a review on Ar-Rahnu’s concept and challenges faced by Islamic pawn shops in Malaysia. Ar Rahnu is useful for those who need a small loan of at least RM 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. In Malaysia, Ar Rahnu is a relatively new micro credit instrument.

Ar-Rahnu; Islamic pawn broking; Micro credit instrument. Click Here to Leave a Comment Below. Show full item record. Notify me of follow-up comments by email. Ar Rahnu is free pawnvroking any riba and gharar element.

Notify me of new posts by email. Borrowers have a choice either to repay either via lump sum or by monthly installments. It implies that this instrument will help the community to increase economic capability of their families.

Step pawnbroklng — Do take note that there is a monthly safekeeping fee.

Only safekeeping fees as agreed will be charged on the pledged item. Borrowers only need pay the principal plus a safekeeping fee as agreed in the agreement during the maturity date.