Negara Malaysia Bank (“BNM”) announced on December 20, 2019 that its Shariah Advisory Council (“SAC”) had decided that the ar-rahnu product structure proposed by Islamic financial institutions did not meet the requirements of Sharia law in BNM`s framework policy document for the following reasons: Ar Rahnu is free of any riba and gharar elements. Borrowers only have to pay the principal plus a conservation fee agreed in the contract during the due date. However, if you need longer-term credit without collateral, a private loan may be more appropriate. You can use Loanstreet`s personal credit comparison tool to find the best personal credit for you. In Malaysia, Ar Rahnu is a relatively new instrument of microcredit. Only gold and gold jewelry can be mortgaged. It is available for both natives and foreigners, Muslims and non-Muslims, credit durations vary from 1 to 6 months. Borrowers have the choice to repay either by flat rate or by monthly payment. In general, the financing margin is between a minimum of RM100 and 60-70% of the value of gold. Ar Rahnu, also known as Ar Rahn, is an Islamic pawnshop for short-term secured loans. The development of Ar Rahnu in Malaysia offers another pawnshop service for borrowers, in line with Sharia principles.
In Malaysia, there are two types of agents that offer Ar Rahnu facilities: if the borrower cannot repay the loan, it is possible to get extensions of up to 3 months.