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Ar Rahn

By | June 2013
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OBJECTIVES: After completing this chapter, students should be able to: 1. Understand the concept of Al–Rahn in Islam. 2. Appreciate the benefits of Al–Rahn in securing loan transactions 3. Apply their understanding to the modern business practices.

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Al-Rahn (Pawning)
DEFINITION
Literally: Fixed, permanent and continuity; or detained, confined, prison and hostage Translated in English as pledging, pawning or mortgage {[But1] every human being will be held in pledge for whatever he has earned} 2(At-Tur: 21) {[On the Day of Judgement] every human being will be held in pledge3 for whatever [evil] he has wrought} (Al–Muddaththir: 38) Technically: Rahn is to make a property a security in respect of a right of claim, the payment in full of which from that property is permitted4 or Possession offered as security for a debt so that the debt will be taken from them in case the debtor fails to pay back the due money.

Rahn is classified as a contract under the category contract of security or contracts pertaining to authentication The purpose of Rahn is to convince the creditor that the debt will not simply disappear or vanish in case of default payment on part of the debtor.

The verse begins with {And as for those who have attained to faith and whose offspring will have followed them in faith, We shall unite them with their offspring; and We shall not let aught of their deeds go to waste: ….} – implying that the righteousness of their children increase the merit of the parents. 2 The righteousness of the parents cannot absolve their offspring from individual responsibility (Muhammad Asad page 808) 3 detained, confined and hostage 4 THE MEJELLE, page 107; The Other Press 1

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This is because, in case of non-payment, the pledged property will be sold or auctioned and the proceeds will be taken by the creditor to compensate for the losses as a result of the bad debt. However, the creditor is only entitled to the total amount owed to him by...
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