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Ar-Rahnu
Middle-East Journal of Scientific Research 13 (Research in Contemporary Islamic Finance and Wealth Management):
98-102, 2013; ISSN 1990-9233
© IDOSI Publications, 2013
DOI: 10.5829/idosi.mejsr.2013.13.1888

The Concept and Challenges of Islamic Pawn Broking (Ar-Rahnu)
1

S. Hisham, 1S. Abdul Shukor, 1A.B. Ummi Salwa and 2Kamaruzaman Jusoff

Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia,
71800 Bandar Baru Nilai, Negeri Sembilan, Malaysia
2
Department of Forest Production, Faculty of Forestry, Universiti Putra Malaysia,
43400 UPM Serdang, Selangor, Malaysia
1

Abstract: The introduction of Islamic pawn broking (Ar-Rahnu) in Malaysia is seen as a new micro credit instrument. This paper aims to provide a review on Ar-Rahnu’s concept and challenges faced by Islamic pawn shops in Malaysia. The study employs library and archive research to achieve the objectives of the paper.
Islamic pawn broking consists of four basic concepts namely Qardhul Hasan, Ar-Rahnu, Al-Wadi 'ah and
Al-Ujrah. 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 addition, assets pawned are guaranteed to be kept safely and there is a fair practice in auctioning and bidding. In addition, Ar-Rahnu also helps finance educational needs and provides capital to small businesses and entrepreneurs. It implies that this instrument will help the community to increase economic capability of their families. Future research should study effective ways in managing challenges faced by Islamic pawn shops.
Key words: Islamic pawn broking

Ar-Rahnu

Micro credit instrument

INTRODUCTION

borrower may pay extra to the lender), Ar-Rahnu
(the borrower is required to place a valuable asset for the loan extended by the lender and it may be utilized as payment if the debt is not repaid within the agreed period), Al-Wadi’ah (The borrower is required to



References: Bhatt, P. and J. Sinnakkannu, 2008. Ar-Rahnu (Islamic pawn Mohd Ali, B., 2005. A new era in microfinance in Malaysia [Accessed on 8 Mac 2012] Abdul Razak, A., 2004 Agrobank, 2012. Ar-Rahnu Agrobank. Available from: Kharofa, A.E., 1997. Transaction in Islamic Law, A.S Ali al-Syawkaniyy, M., 1999. Nail awtar min Ahadith Sayyid Li Akhyar Syarh Muntaqa al-akhbar Al-Zuhailiyy, W., 2003. Islamic jurisprudence and it 's proofs Angkasa, 2005. Skim pajak gadai Islam Ar-Rahnu: konsep dan perlaksanaannya 10. Al-Bugha, M. and A. Al-Syarbiniyy, 2000. 11. Al-Shirbini, K.., 1997. Mughni al-muhtaj ila ma 'rifat al-ma 'ani alfaz sharh al-Minhaj 12. Farush Khan, F.F., 2006. Gadaian tanpa bunga.

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