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The Awareness of AlRahn


1. Introduction
i - Pawnbroking
ii- Ar rahn

2. Literature review
3. Problem
4. Research







2008 Ar-Rahnu system has the capacity and capability to fill the gap in short-term credit structure Ar-Rahnu is not a competition to the conventional pawn broking. Monash University Sunway Campus.Payal Bhatt. but it is in rising demand .

But there is no significant difference between conventional and Islamic pawn broking which are 98. DURHAM UNIVERSITY.5% and 98. .3% respectively.Pawnshops are the most preferable source to obtain instant cash. However. .YaPEIM & Bank Rakyat – Non-Muslims are aware & their demand are quite promising .AZILA ABDUL RAZAK. 2011 .Generally.go for conventional pawn broking due to some reasons.Muslim awareness towards pawn broking is arising. community agreed that pawn broking give positive impacts to them. it is shown that. . there are still many Muslim .MAIDAM – Non-Muslims are aware about Ar-Rahnu but it still in low demand from them .From her study. .

the qualification is tight People choose conventional pawnbroking • Really high interest .• • • • High cost living Many applying for personal loan However.

• To investigate the issue on the need for Ar-Rahn compared to conventional pawnbroking • To find out the perception on ArRahn among community. muslim and non-muslim • To recommend solutions to the issues pertaining Ar-Rahn .

muslim and non-muslim • What is the best solutions to the issues pertaining Ar-Rahn .• What is issue on the need for Ar-Rahn compared to conventional pawnbroking • What is the perception on ArRahn among community.

(74:38) The author wrote that legally it refers to holding an item in lieu of a legal right that may be satisfied from that item. property surrendered as insurance on debt claimant. Fiqh schools of thought defined Rahn differently – as follows – but with similarities on the context.Every soul will be held in pledge for its deeds. .

so that the debt may be extracted from the property if it is not possible to recollect from the debtor. • Hanbali: A pawned object is a property used as insurance for a debt. whereby the debt may be extracted from the held property if it is not repaid. as a means of insuring a loan that has matured or is about to mature. • Maliki: It is the act of taking a valued property from its owner.• Shafie: Taking a non-fungible property as insurance against a fungible debt. .

2:283 .

” . then use the receipt of pawned objects. 2:283 . From Quran.• The practice of Rahn is legalized through the authorities of Quran. Sunnah as well as the consensus regards it as permissible. Sunnah . and he pawned his iron shield with him.If you are on a journey and cannot find a scribe.narrated by AlBukhari on the authority of Aishah that “The Prophet (pbuh) bought some food from a Jew.

Mostly by low income earners in rural areas. .• Pawn broking business was introduced in Malaysian early 19 th century • The conventional pawn broking system is popular for quick cash borrowings. • The downside of conventional pawn broking service-high interest charges and unfair practices • To help the society. an alternative pawning system or Ar-rahn was introduced and received encouraging response.

pawn broker (murtahin). Provide immediate financing to assist individual in overcoming cash flow needs through methods which are considered halal by the Shariah regulation.Al-Rahnu (Islamic pawn broking) 1. 2. 3. pledged asset (rahn) If pledger does not repay qard hasan loan within agreed period. 4. pawn broker can auction off pledged asset . Pawning contract is voluntary charitable contract (Tabarru’) Parties in contract:  Pledger (rahin).

allowance. commission and the like. wage. it can be in the form of salary.Ujrah can be defined as financial payment for the utilization of services or usufruct. QARDH HASAN . AL-WADI’AH .possessions offered as security for a debt so that the debt will be taken from it in case the debtor failed to pay back the due money.the borrower only to pay the amount borrowed. .ISLAMIC CONTRACT AND CONCEPT AR-RAHN .customers will deposit money in the bank for safekeeping purposes and the bank guarantees the refund of the money. AL-UJRAH . The bank may reward the customers in the form of hibah (gift).

Pledge asset 3. Qard hasan loan Customer 1. Custodial fee under wadi'ah yad-amanah Repay qard hasan loan Return pledged asset Islamic pawn broker .Mechanisms of AlRahn 2.

LEGAL DOCUMENTATION AND ISSUES Event of Repayment Event of Redemption Event of Default Event of Recovery Event of Auction .

Development Financial Institution Act 2002 which specify provisions for the regulation and supervision of development financial institutions and for matters connected therewith. . Cooperatives societies act 1993 which outline the regulations on cooperatives.GUIDELINES 1. and 4. 3. Goods and Services Tax (GST) guidelines which provide guidelines on items that subject into taxation. 2. Pawnbrokers Act 1972 which regulates the pawnbroking activity in Malaysia.

Advantages • • • • • It provides a cheaper way to obtain financing and is free from interest Assets pawned are guaranteed to be kept safely There is a fair practice in auctioning and bidding Helps finance educational needs and provides capital to small businesses and entrepreneurs Help the community to increase economic capability of their families .

Up to 60% .If it belongs to someone else.Valuation is must lower than market value .The balance after auction will not be returned back buy the company to the pledger .Must provide proof of ownership either through the letter of purchase/receipt or -letter of undertaking -not required to provide proof of ownership .70% of the value of pawned gold .The balance after the auction will be returned back by the company to the pledger .DIFFERENCES BETWEEN AR RAHN AND PAWNBROKING PRINCIPLES AR RAHN PAWNBROKING OWNERSHIP .Pledged item will be auction publicly Not transparent Transparent and notice will be sent Balance after auction .Average 30.Valuation based in the current market value .5% . a letter of consent approval from the owner is required Pawning value Default .

YAPIEM.Cheaper Insurance . state government agencies.More expensive rate Charges .Gold plated items are nor acceptable .Interest is charged .Not covered .Sole proprietor based . .Institutions base eg: banks.Any valuable items .Ornamented gemstones on gold item will not be valued .Takaful coverage . co-orperatives.PRINCIPLE AR RAHN S PAWNBROKING Operator . only a 25% compensation is offered Items .If the pledged items are lost.Monthly safekeeping charges .No interest charge .Individual based .Pound gold and white gold not accepted .Only pure gold accepted .

Example: Ar-Rahn certificate .

job scope and solution.19 the questionnaires will be collected • There are five factors to be examines which namely as muslim and non muslim.• The method of collecting the data was by distributing the questionnaires randomly to the respondents and interview. level of awareness. income. . • By using the Statistical Package for Social Science (SPSS) v.