Ar Rahnu

Topics: Money, Debt, Loan Pages: 2 (607 words) Published: November 17, 2012
What is Al Rahnu?
Ar Rahnu-i is an Islamic pawn broking service that allows gold jewellery to be used as a surety against credit. The Bank will retain the gold as collateral and charge for safekeeping service. The gold will be valued at the prevailing market price and the loan amount is up to 70% of the current market value. The safekeeping period is determined and agreed upon by both parties. At the end of the period, the loan must be paid to the Bank and the collateral reclaimed. The item maybe utilized as a payment if the debt is not repaid within the agreed period.Al Rahnu are Islamic pawn broking scheme based on Syariah principles of Al-Qard, Al-Wadiah and Al-Ujrah that provides an immediate loan facility to overcome cash-flow needs, and preventing illegal or unlicensed loan activities. Ar Rahnu

The concept of Ar Rahnu
1. Al-Wadiah (savings with trust/guarantee)
Al-Wadiah refers to agreement where customers deposit money in the Bank, and the Bank becomes wholly responsible and liable for its safekeeping.

2. Al-Mudharabah (profit-sharing)
Al-Mudharabah refers to an agreement where customers deposit capital in the Bank, and the Bank becomes wholly responsible and liable in the management and investment the deposits in halal business ventures. Profits gained will be divided and distributed accordingly, based on margins agreed upon earlier.

3. Bai-Bithaman Ajil (deferred payment sale)
Bai-Bithaman Ajil refers to the sale of goods on a deferred payment basis at a price which includes a profit margin agreed by both parties.

4. Bai-Al'Inah (immediate cash)
Bai-Al'Inah refers to the selling of an asset by the Bank to the customer through deffered payments. At a later date, the Bank will repurchase the asset and pay the customer in cash terms.

5. Al-Musyarakah (joint venture)
Al-Musyarakah refers to a partnership or joint venture for a specific business purposes with a profit motive, whereby the distribution of profits/losses...
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