Ar-Rahnu (Islamic Pawning Broking) Opportunities and Challenges in Malaysia

Abstract

This paper aims to identify the key factors that have contributed to the existence and the growth of Ar-Rahnu (Islamic pawn broking scheme) in Malaysia. Based on the previous studies and cost of borrowing analysis, this paper found that the need for interest (riba) free, transparent transaction and low cost short-term cash borrowing scheme is much preferred by the pawning customers. Besides that the cost of borrowing in this scheme is the lowest compared to the conventional pawn broking scheme. However, the Ar-Rahnu scheme needs to address central issues such as the marketing, public awareness and the locations of this scheme.

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