More Cooperatives To Provide Ar-Rahnu Service This Year

KUALA LUMPUR, Feb 14 (Bernama) -- A total of 71 cooperatives with the potential of providing RM1 billion in financing are currently under the process of getting approvals from the Cooperatives Commission of Malaysia (SKM) to provide Ar-Rahnu or Islamic pawnshop service, said Minister of Domestic Trade, Cooperatives and Consumerism Datuk Seri Ismail Sabri Yaakob.

Source from (Bernama): http://www.bernama.com/bernama/v6/newsbusiness.php?id=927985
Published: February 15, 2013

Among the conditions set by SSM for the provision of Ar-Rahnu include members of a cooperative having RM500,000 in funds and a good administration, Ismail Sabri said at the launch of SKM's guidelines for Ar-Rahnu activities, here, Thursday.

The chances of the 71 cooperatives getting the approvals are high if they meet the regulations set by the SKM, its Head of Sector (Operational and Supervision), Haji Mat Deris Jusoh told Bernama following the launch.

Ismail Sabri said the financing of 51 cooperatives involved in Ar-Rahnu activities last year amounted to RM520 million and with the approval of 71 more cooperatives this year, the amount could double up.

"From the 51 cooperatives last year, 27 cooperatives now individually provide the Ar-Rahnu service while another 24 cooperatives are operating along a franchise line under the Ar-Rahnu X'Change Bank Rakyat scheme," the minister said.

Meanwhile the set of guidelines launched today is expected to be enforced March 1, and they are expected to help Ar-Rahnu operators towards providing a more streamlined and efficient service.

Pawn shop activities in Malaysia come under the Pawnbrokers Act 1972 but there are currently no special laws covering the activities and operations of Ar-Rahnu which is also based along the pawnshop system.

The cooperative sector is among the major movers in the Islamic pawnshop activity currently.

The Ar-Rahnu service is aimed at helping people as well as cooperative members to get easy access to cash financing, based on Syariah principals, for the purpose of business capital, education as well as for expansion of their small and medium businesses.

Under the guidelines, the cooperatives will be allowed to provide financing not amounting to more than RM50,000 or more than 70 per cent of the value of the pawned item.

-- BERNAMA