Ar-Rahnu Industry

The Ar-Rahnu industry is a form of Islamic pawnbroking or collateral-based lending prevalent in Muslim-majority countries, particularly in Southeast Asia. "Ar-Rahnu" comes from Arabic, where "Ar" means "the" and "Rahnu" refers to pawning or collateral.

Unlike conventional pawnbroking, Ar-Rahnu avoids elements prohibited by Shariah, such as riba (usury) and gharar (excessive uncertainty). This system allows individuals to obtain secured short-term financing by pawning gold or jewelry made of gold.

The industry has been particularly beneficial for micro-entrepreneurs and individuals from lower-income groups, offering them an alternative to traditional banking services especially those from the B10 (hardcore poverty) to B40 (low income) categories.

In Malaysia, Ar-Rahnu is available to both locals and foreigners, Muslims and non-Muslims alike, with loan tenures typically ranging from 1 to 6 months. Borrowers have the option to repay either via lump sum or by monthly installments.

Ar-Rahnu also serves as a vital source of financial sustainability, particularly for micro-entrepreneurs who play a crucial role in the Malaysian economy. The service’s ability to cater to immediate financial needs without the complexities of conventional loan systems makes it a valuable component of Malaysia’s financial landscape.