Fiqh
Muamalat II
MGA3043
Al-Rahn ()الرهن
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Lecture Outlines
Shariah Rulings of al- Pillars (and conditions)
Definition
Rahnu of al-Rahnu
Operational Issues
• al-Rahnu scheme (SAR –
Ayat and Ahadith al- Skim Al-Rahnu) in Malaysia
SAR vs Conventional
Ahkam • Modus operandi of Pawnshop
Malaysian Al-Rahnu Scheme
Topics for the
discussion in the
tutorial classes
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TOC
Definition
• Al-Rahn literally means : “Covenant; promise; solemn
;promise”. [Pledge; Mortgage; Pawning; Charge
]Security; Collateral
هو -في اللغة -الحبس ،ومنه قوله تعالى" :كُّل نفٍس •
بما كسبْت رهينة" (المَدثر :)38 :أي محتسبة وممنوعة
من دخول الجنة يوم القيامة ،بسبب ما كسبته في
.الدنيا ،حتى تحاسب عليه
ويأتي أيضًا بمعنى الثبوت والدوام ،جاء في مختار •
الصحاح :أرهنُت لهم الطعام والشراب أدمته لهم،
.ويقال :األحوال الراهنة ،أي الحاضرة والدائمة
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Definition
• Technically:
• A contract to make a property a security in
respect of a right to claim, the payment for this
may be taken from the value of that (pledged)
property (after it is sold).
• ُيستوفى منها عند،جعل عين متمولة وثيقة بَدْين
تعّذر الوفاء
• (Fiqh Manhaji)
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TOC
Shariah Rulings
• Mubah: Al-rahnu is permissible (ja’iz) .
• It is considered as an act of tabarru’ like al-
wadiah, al-qard, al-hibah, al-i’arah (uqud al-
tabarru’at).
• It is also a type of ‘uqud al-istithaq ()االستيثاق.
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Definition
From the definition, we could understand that al-rahnu is a
secondary contract. It means that it cannot stand by itself
unless there is a primary contract and that is “debt”.
Hence, jumhur consider “debt” as one of the pillars of al-
rahnu contract. Additionally, the debt is actually the
backbone of al-rahnu contract as it is the reason why al-
rahnu contract comes to existence.
A debt can exist out of a sale contract, a loan contract,
compensation of rights, marriage (mahr mu’ajjal), etc.
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TOC
Pillars of al-rahnu
Al-Rahnu
Contracting Format
Parties Subject Matter
Al-Dayn
Al-Rahin Al-Ijab
Al-Murtahin Al-Marhun Al-Qabul
Al-Jumhur
Al-Hanafiyyah 18
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TOC
Some Main Rulings Related to al-Rahnu
Some important laws regarding with the al-
Rahnu contract are as per following points:
– This contract becomes irrevocable after the
pledge is received by the pledgee (because al-
rahnu is a kind of uqud ‘ainiyyah).
– One pledge may be exchanged for another.
– The pledgee may, on his own accord, annul the
contract.
– Two different creditors may take a common
pledge from a single debtor. This pledge will
secure the whole of two debts.
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– When a debt is partly paid off, it does not
become necessary to return the part of the
pledge equivalent to it in full. The pledgee has a
right to hold the whole until the debt is paid.
– If the pledgor has destroyed or damaged the
thing pledged, he must pay compensation. If the
pledgee has destroyed or damaged it, the
amount of its value is struck off the debt.
– If the time for paying the debt has arrived, and
the pledgor refuses to make payment, the
pledgee may approach to court to compel the
pledgor to sell the thing pledged in order to pay
the debt. On his refusal, the court may sell the
pledge to pay the debt.
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TOC
Some Main Rulings Related to al-Rahnu
Maintenance (cost) of al-rahnu: Who should bear it?
• Jumhur: The pledgor should bear all the costs.
ال يْغَلُق الَّر ْهُن ِمْن َصاِح ِبِه الذي َر َهَنُه َلُه ُغْنُمُه: قاَل َر ُس وُل الله
َوَعَليِه ُغْر ُمُه
• Al-Hanafiyyah:
– Cost identical to the ownership/continuity (tabqiyah) of al-marhun –
al-Rahin.
– Cost identical to the preservation (al-hifz) of al-marhun – al-Murtahin.
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Some Main Rulings Related to al-Rahnu
Utilization of al-marhun by the al-rahin/pledgor
• Al-Jumhur: It is not permissible except with the permission
of the pledgee (al-Hanafiyyah & al-Hanabilah).
• The permission from the pledgee to the pledgor to use al-
marhun shall invalidate the al-rahnu contract (al-
Malikiyyah).
• Al-Shafi’iyyah: It is permissible even without the permission
of the pledgee with the condition that the utilization of the al-
marhun (by the pledgor) should not lead to the decrease of
its value.
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TOC
Some Main Rulings Related to al-Rahnu
Utilization of al-marhun by the al-murtahin/pledgee
• Al-Jumhur: It is not permissible.
– Al-Hanafiyyah: It is not permissible even with the permission of the
pledgor as it is similar to: كل قرض جر نفعا فهو ربا
– Al-Malikiyyah: It is not permissible unless with the permission of
the pledgor; the debt is created out of sales contract (or similar
contracts) and the period is determined and agreed upon by the
parties.
– Al-Shafi’iyyah: Generally, it is quite similar to al-Malikiyyah’s stance.
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TOC
Some Main Rulings Related to al-Rahnu
Utilization of al-marhun by the al-murtahin/pledgee
Without payment: It is not
• Al-Hanabilah: permissible if the debt is created
out of a loan contract
Non-animals e.g. house, (non- It is not permissible unless with
growing) object the pledgor’s permission
With payment: It is permissible even if
the debt is created out of a loan
contract, a sale contract, a rental
Al-marhun
contract or any debt which does not
originate from a loan contract
Animals e.g. sheeps, cows It is permissible even
Dairy (mahlub) & ride-able without the pledgor’s With condition that the utilization cost
markub animals. permission should be maintained by the pledgee
and the utilization should be in
reasonable scale/amount
«الَّظْهُر ُيْر َكُب ِبَنَفَقِتِه ِإَذا َكاَن: ِ َقاَل َر ُس وُل الَّله
َوَعَلى، َوَلَبُن الَّدِّر ُيْش َر ُب ِبَنَفَقِتِه ِإَذا َكاَن َمْر ُهونًا،َمْر ُهونًا
<<اَّلِذي َيْر َكُب َوَيْش َر ُب الَّنَفَقة
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Application of Al-Rahnu
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Al-Rahnu Scheme (SAR) in Malaysia
• In April 1983, an initiative of introducing Islamic pawnshop has
been discussed in the meeting of “Majlis Kebangsaan Bahagian
Hal Ehwal Islam Malaysia.”
• The proposal for the establishment of an Islamic pawnshop i.e.
“Perancangan Penubuhan Pajak Gadai Islam” has been put
forward in the meeting of Malaysian Cabinet, and they have
approved it on 30th January 1985.
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Al-Rahnu Scheme (SAR) in Malaysia
• Majlis Agama dan Adat Istiadat Melayu Terengganu (MAIDAM)
launched the first Islamic pawnshop in Malaysia, namely
Muassasah Gadaian Islam Terengganu (GMIT) in January
1992.
• In the same year on 12th March, Permodalan Kelantan Berhad
also introduced “Kedai Al-Rahnu” in Kota Bharu.
• These two Islamic pawnshops pioneered the establishment of
Islamic micro credit in the country.
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Al-Rahnu Scheme (SAR) in Malaysia
• Then, one committee headed by Tan Sri Dato’ Nor Mohamed
Yackop (BNM’s Advisor) was set up by Yayasan Pembangunan
Ekonomi Islam Malaysia (YPEIM) and Bank Negara Malaysia to
study and develop Al-Rahnu Scheme (SAR).
• Then, in October 27, 1993, the initial project of SAR was introduced
via Bank Kerjasama Rakyat Malaysia (Bank Rakyat) where:
– YPEIM was the Coordinator and Major Fund Provider,
– Bank Kerjasama Rakyat Malaysia (Bank Rakyat) was the Service
Provider, and
– Bank Negara Malaysia was the Secretariat and Project Advisor.
• It was then officially launched in Kedah in July 16, 1994.
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TOC
Al-Rahnu Scheme (SAR) in Malaysia
• Malaysian Government has provided RM 20 million to YPEIM -
in October 17, 1997 - based on Al-Mudharabah principle with
Profit Sharing Ratio (PSR) of 70:30, and RM 9.1 million of the
fund was allocated to Bank Islam Malaysia Berhad (BIMB) for
SAR project.
• Soon after that, SAR was introduced in BIMB and Koperasi
YPEIM Berhad in November 1997 and September 2000
respectively.
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Ujrah-Based ArRahnu Scheme
From 1993- December 2019
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TOC
Underlying Shariah Contracts of SAR?
• al-Qardh + Al-Wadiah Yad al-Dhamanah
This one? + al-Ujr
• al-Qardh + Al-Wadiah Yad al-Dhamanah
Or? + al-Ujr + al-Rahn*
• al-Qardh + al-Rahnu + al-Wadiah Yad al-
Or? Dhamanah
Or? • al-Qardh + al-Rahnu + al-Ujrah
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From 1993- December 2019
Al-Rahn contract
(directly or from Wadi’ah)
Skim ArRahnu
Al-Qard contract (1993-2019) Al-Ujrah contract
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2004
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From Ujrah-Based Al-Rahnu
Scheme to
Tawarruq-Based ArRahnu Scheme
BNM: 20 December 2019
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BNM’s PD:
18 July 2018 2 October 2015
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• Bank Negara Malaysia (‘BNM’) announced on
20 December 2019 that its Shariah Advisory
Council (‘SAC’) has resolved that the ar-
rahnu product structure offered by Islamic
financial institutions does not fulfil the Shariah
requirements in BNM’s Rahn Policy Document
for the following reasons –
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– The interconditionality and interdependency between the
loan contract and the elements of pledge, safekeeping and
fee in the product structure gives rise to the issues of qard
jarra naf`an (loan that benefits the lender) and bai` wa
salaf (combination of sales contract with a loan) which are
prohibited in Shariah. In the ar-rahnu structure, each
contract will not take effect without the other contracts. For
instance, the loan will only be provided with the condition
that customers safekeep their gold with the Islamic financial
institution where a safekeeping fee is charged. Such
structure where the safekeeping fee charged is connected
to the loan provided indirectly raises the issue of qard jarra
naf`an; and
– The combination between the pledge and the loan contract
in the ar-rahnu structure for the purpose of profit generation
is not in line with the objective of both contracts (muqtada
‘aqd) in which the former is for pledging while the latter is for
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charity.
• Accordingly the SAC has ruled as follows –
– To prohibit ar-rahnu based on the above structure will
effect from 1 February 2020;
– Islamic financial institutions are temporarily allowed
to apply the views of their respective Shariah
Committee on the ar-rahnu product structure up until
the date of the SAC ruling comes into effect; and
– Any new and outstanding ar-rahnu financing
including the income generated before the above
SAC ruling takes effect is allowed to continue until
the maturity of the financing, based on the previous
decision of the respective Shariah Committee of IFIs.
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Scenario: Points to Ponder
• Based on the statistical fact of a study, it is observed that our
Muslim community constitute the biggest portion of al-Rahnu
sheme customers. Surprisingly, in another study, it is also found
that Muslims are the major users of conventional pawnshop
services.
• Why there is still a big portion of Muslim customers who opt to take
loans from the conventional pawnshop instead of al-rahnu
institutions?
• Is al-rahnu associated with the low class community?
• What are measures to switch the Muslim customers of conventional
pawnshop to Islamic scheme of al-Rahnu?
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Review Questions
• Al-Rahnu Scheme: SAR Equation, any issue?
• Al-Rahnu Scheme vs Conventional Pawnshop
• Calculation of al-Ujrah in SAR?
• Functions and benefits of al-rahnu (socio-economic
contributions)
• Switching Muslim customers to al-rahnu institutions
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Q & A Session
شكرا جزيال على حضوركم وحسن
استماعكم
المحاضرة المتواضعة هذه
in issue
s of t heإلى
t h e m a r t o t h e
nl y c o ver e d t o re fe
s l i d e so e re q u ir d e t ai l s.
Thes e e n t s ar m o re
e st ud c es f o r
c . T h f e re n
topi en de d re
recomm
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