RAHN
Pledge; Mortgage; Pawning;
Charge; Security; Collateral
Faculty of Economics and Muamalat,
USIM
MGA3043 FIQH MUAMALAT II
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Debt Management Contracts
• Rahnu • Bayn al-Dayn li • Claims on inherited
• Kafalah al-Madin (Sale of Debt
to the Debtor) properties
• Hawalah
• Bayn al-Dayn li Ghayr
al-Madin (Sale of Debt
to the Third Party) • Voluntary settlement
• Ibra’
• Muqassah (Set-Off) • In the hereafter:
– Reward
• Ta’wid – Sin
• Gharamah
2
Course Instructor/ Lecturer
Dr. Abdullaah Jalil
Senior Lecturer
Universiti Sains Islam Malaysia (USIM)
Email: [email protected] /
[email protected]
FB: Abdullaah Jalil
FB Page: Penuntut Ilmu & Masjid Hati Ummah
Website: www.penuntutilmu.com
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Lecture Outlines
Shariah Rulings of Pillars (and conditions) Ayat and Ahadith
Definition
al-Rahnu of al-Rahnu al-Ahkam
Operational Issues
• al-Rahnu scheme (SAR Topics for the
–Skim Al-Rahnu) in Malaysia SAR vs Conventional
discussion in the
• Modus operandi of Pawnshop
Malaysian Al-Rahnu tutorial classes
Scheme
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Definition
• Al-Rahn literally means: “Covenant; promise; solemn
;promise”. [Pledge; Mortgage ;Pawning; Charge
]Security; Collateral
ﺲ ﺑﻤﺎ ﻛﺴﺒﺖْ رھﯿﻨﺔ" )اﻟﻤﺪَﺛﺮ:(38 :
• ھﻮ -ﻓﻲ اﻟﻠﻐﺔ -اﻟﺤﺒﺲ ،وﻣﻨﮫ ﻗﻮﻟﮫ ﺗﻌﺎﻟﻰ" :ﻛﻞﱡ ﻧﻔ ٍ
أي ﻣﺤﺘﺴﺒﺔ وﻣﻤﻨﻮﻋﺔ ﻣﻦ دﺧﻮل اﻟﺠﻨﺔ ﯾﻮم اﻟﻘﯿﺎﻣﺔ ،ﺑﺴﺒﺐ ﻣﺎ ﻛﺴﺒﺘﮫ ﻓﻲ اﻟﺪﻧﯿﺎ ،ﺣﺘﻰ
ﺗﺤﺎﺳﺐ ﻋﻠﯿﮫ.
• وﯾﺄﺗﻲ أﯾﻀﺎ ً ﺑﻤﻌﻨﻰ اﻟﺜﺒﻮت واﻟﺪوام ،ﺟﺎء ﻓﻲ ﻣﺨﺘﺎر اﻟﺼﺤﺎح :أرھﻨﺖُ ﻟﮭﻢ اﻟﻄﻌﺎم
واﻟﺸﺮاب أدﻣﺘﮫ ﻟﮭﻢ ،وﯾﻘﺎل :اﻷﺣﻮال اﻟﺮاھﻨﺔ ،أي اﻟﺤﺎﺿﺮة واﻟﺪاﺋﻤﺔ.
6-Nov-23 Lecture 1 (c) Copyright Abdullaah Jalil 5
• 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].
ﯾُﺴﺘﻮﻓﻰ ﻣﻨﮭﺎ ﻋﻨﺪ ﺗﻌﺬّر،ﺟﻌﻞ ﻋﯿﻦ ﻣﺘﻤﻮﻟﺔ وﺛﯿﻘﺔ ﺑ َﺪﯾْﻦ
اﻟﻮﻓﺎء
(Al-Fiqh al-Manhaji)
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BNM PD on Al-Rahnu contract [S, 8.1]:
“a contract where a party, as pledgor (rahin)
pledges an asset as collateral (marhun) to
another party, a pledgee (murtahin), to fulfil an
obligor’s liability or obligation (marhun bih) owing
to the pledgee in the event of default of such
obligor.”
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Discussion
• 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 credit sale contract, a loan contract,
compensation of rights, dowry (mahr mu’ajjal), etc.
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Underlying Relationship
DEBT
(1)
Al-Da’in/Creditor Al-Madin/Debtor
rity
c u
Se
(2)
Al-Murtahin/Pledgee Al-Rahin/Pledgor
MARHUN
6-Nov-23 Lecture 1 (c) Copyright Abdullaah Jalil 9
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Shariah Ruling and Nature of Al-Rahnu Contract
• 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 (( )اﻻﺳﺗﯾﺛﺎقdebt
security contracts).
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• The inherent nature of rahn is the assurance that the
liability or obligation owed by the obligor to the pledgee
will be fulfilled in the event of a default as agreed in the
terms and conditions of rahn.
• Rahn is binding on the pledgor upon entering into the
contract. The pledgor does not have the right to revoke
the rahn contract without the consent of the pledgee.
• Terms and conditions that have been mutually agreed
upon and are consistent with Shariah principles shall
be binding on the pledgor and pledgee.
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Al-Quran
• ﻓﻘوﻟﮫ ﺗﻌﺎﻟﻰ" :وان ﻛﻧﺗُم ﻋﻠﻰ ﺳﻔر وﻟم ﺗﺟدوا ﻛﺎﺗﺑﺎ ً ﻓرھﺎنٌ ﻣﻘﺑوﺿﺔ"
)اﻟﺑﻘرة.(283 :
• ﺟﺎء ذﻟك ﺑﻌد ﻗوﻟﮫ ﺗﻌﺎﻟﻰ" :ﯾﺎ أﯾﮭﺎ اﻟذﯾن آﻣﻧوا اذا ﺗداﯾﻧﺗُم ﺑدَ ﯾْن اﻟﻰ اﺟل
ﻣﺳﻣّﻰ ﻓﺎﻛﺗﺑوه (282) " ..
• ﻓد ّل ﻋﻠﻰ أن اﻟرھﺎن ﺗﻘوم ﻣﻘﺎم اﻟﻛﺗﺎﺑﺔ ﻓﻲ اﻟﺗوﺛﯾق ﻟﻠدَ ﯾْن ،وذﻟك ﻋﻧوان
اﻟﻣﺷروﻋﯾﺔ.
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Al-Sunnah
• ﻓﺄﺣﺎدﯾث ﻛﺛﯾرة ،ﻣﻧﮭﺎ :ﺣدﯾث ﻋﺎﺋﺷﺔ رﺿﻰ ﷲ ﻋﻧﮫ ﻗﺎﻟت" :ﺗوﻓﻲ رﺳول
ﷲ ﺻﻠﻰ ﷲ ﻋﻠﯾﮫ وﺳﻠم ودرﻋﮫ ﻣرھوﻧﺔ ﻋﻧد ﯾﮭودي ﺑﺛﻼﺛﯾن ﺻﺎﻋﺎ ً ﻣن
ﺷﻌﯾر".
• ﺣدﯾث ﻋﺎﺋﺷﺔ رﺿﻰ ﷲ ﻋﻧﮭﺎ وﻏﯾره :أن اﻟﻧﺑﻲ ﺻﻠﻰ ﷲ ﻋﻠﯾﮫ وﺳﻠم
اﺷﺗرى ﻣن ﯾﮭودي طﻌﺎﻣﺎ ً اﻟﻰ أﺟل ،ورھﻧﮫ درﻋﺎ ً ﻣن ﺣدﯾد.
• )اﻟﺑﺧﺎري
)إﺟﻣﺎع اﻟﻣﺳﻠﻣﯾن ﻓﻲ ﻛل اﻟﻌﺻور واﻷزﻣﺎن( • And:
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Pillars of Al-Rahnu
Pillars of
al-Rahnu
Contracting
Subject Matter Format
Parties
Pledge/
Pledgor Pledgee Qabul
Debt (Dayn) Collateral Offer (Ijab)
(Rahin) (Murtahin) (Acceptance)
(Marhun)
Jumhur (Majority of Islamic Jurists)
Hanafiyyah
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Some Main Rulings Related to al-Rahnu
• Al-Rahnu contract becomes irrevocable for pledgor after the
pledge is received by the pledgee (because al-rahnu is a kind of
‘uqud ‘ainiyyah: hibah, sadaqah, rahn).
• 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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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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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 ﻓﮭﻮ 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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Some Main Rulings Related to al-Rahnu
Utilization of al-marhun by the al-murtahin/pledgee
Without payment: It is not
permissible if the debt is created
• Al-Hanabilah: out of a loan contract
Non-animals e.g. house, It is not permissible unless with
(non-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 contract or any
Al-marhun
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
َو َﻟﺑَنُ اﻟدﱠرﱢ،ً »اﻟ ﱠظ ْﮭ ُر ﯾُرْ ﻛَبُ ِﺑ َﻧ َﻔ َﻘ ِﺗ ِﮫ إِذَ ا ﻛَﺎنَ ﻣَرْ ھُوﻧﺎ: ِ ﷲ
ﻗَﺎ َل رَ ﺳُو ُل ﱠ
6-Nov-23 >>اﻟ ﱠﻧ َﻔﻘَﺔJalil
Lecture 1 (c) Copyright Abdullaah ُ َوﻋَ ﻠَﻰ اﻟﱠذِي ﯾَرْ ﻛَبُ َو َﯾﺷْرَ ب،ً ُﯾﺷْرَ بُ ِﺑ َﻧ َﻔ َﻘ ِﺗ ِﮫ إِذَ ا ﻛَﺎنَ ﻣَرْ ھُوﻧﺎ20
Some Main Rulings Related to al-Rahnu
Maintenance (cost) of al-rahnu: Who should bear it?
• Jumhur: The pledgor should bear all the costs.
ﻻ ﯾﻐْ ﻠَقُ اﻟرﱠ ھْ نُ ﻣِنْ ﺻَ ﺎ ِﺣ ِﺑ ِﮫ اﻟذي رَ َھ َﻧ ُﮫ َﻟ ُﮫ ُﻏ ْﻧ ُﻣ ُﮫ َوﻋَ ﻠَﯾ ِﮫ ﻏُرْ ُﻣ ُﮫ: ﻗﺎ َل رَ ﺳُو ُل ﷲ
• Al-Hanafiyyah:
– Cost identical to the ownership/continuity (tabqiyah) of al-marhun –
al-Rahin/ Pledgor.
– Cost identical to the preservation (al-hifz) of al-marhun – al-Murtahin/
Pledgee.
6-Nov-23 Lecture 1 (c) Copyright Abdullaah Jalil 21
Application of Al-Rahnu
Self-Reading for Additional
Information
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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.
6-Nov-23 Lecture 1 (c) Copyright Abdullaah Jalil 24
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.
6-Nov-23 Lecture 1 (c) Copyright Abdullaah Jalil 25
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
32
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
Or? al-Dhamanah
6-Nov-23
Or? • al-Qardh + al-Rahnu + al-Ujrah
Lecture 1 (c) Copyright Abdullaah Jalil 33
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35
Al-Rahn contract
(directly or from Wadi’ah)
Skim
ArRahnu
Al-Qard contract (1993-2019 Al-Ujrah contract
)
6-Nov-23 Lecture 1 (c) Copyright Abdullaah Jalil 36
2004
6-Nov-23 Lecture 1 (c) Copyright Abdullaah Jalil 37
From Ujrah-Based Al-Rahnu
Scheme to
Tawarruq-Based ArRahnu Scheme
BNM: 20 December 2019
38
18 July 2018 BNM’s PD:
2 October 2015
39
• 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 –
40
– 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.
41
• 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
42
• 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 charity.
43
• 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
44
• 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.
45
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?
6-Nov-23 Lecture 1 (c) Copyright Abdullaah Jalil 46
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
6-Nov-23 Lecture 1 (c) Copyright Abdullaah Jalil 47
Q & A Session
ﺷﻜﺮا ﺟﺰﯾﻼ ﻋﻠﻰ ﺣﻀﻮرﻛﻢ وﺣﺴﻦ اﺳﺘﻤﺎﻋﻜﻢ
إﻟﻰ ھﺬه اﻟﻤﺤﺎﺿﺮة اﻟﻤﺘﻮاﺿﻌﺔ
s o f t h e
i n i s s u e
t h e m a r t o t h e
y c ov e r t o re f e
d e s o n l q u i re d a i l s.
s l i e re d e t
These s t u d e n t s a r
e s f or m o r e
i c . T h e e fe re n c
t o p n d e d r
e
recomm
6-Nov-23 Lecture 1 (c) Copyright Abdullaah Jalil 48
