A Study on the Practice of Ar-Rahnu Institutions in Malaysia

The development of Malaysia’s economy currently shows its potential growth in the Islamic pawn broking system. With the rapid expansion of the Ar-Rahnu market, Ar-Rahnu product has immense potential to reap due to its distinctive features such as economical, affordable pricing, and lesser procedures required. The acceptance of the pledged property on gold alone has led to some difficulties for those who really need financial assistance. Therefore, this research intends to construe Islamic pawnbroking in terms of transparency in measurement, different values of the pledged property as well as address all the issues and challenges. To fulfill the qualitative study, the sampling technique and the population were applied. The respondents involved in states Kelantan states. A semi-structured interview is conducted with Ar-Rahnu officers to distinguish in-depth situations and other issues in managing the pledged property. This study peep into Shariah's background thought to scrutinize the prospect of Islamic pawnbroking in the future with possible recommendations that could be pondered by the policymakers and pawnbrokers. The present research contributed by linking the methodologies, which were often not done in prior studies in the domain of monitoring the pledged property. The present study has limitations due to the focus (sector, region, time) as well as data selection applied). The discussion of the results revealed that there were similarities with the results of existing literature in the context of transparency. However, the study found that among the risks of using pledged assets as collaterals reveals the difference in assessing the actual quality and purity of the asset and the decline in quality over time. Hence, there is a dire need for all Islamic financial services providers to strive the extra mile for Ar-Rahnu's development by applying innovative means to foster financial justice and fairness in societies