From gold to cash the Islamic way


DELEGATES from various financial institutions delivered their deliberations yesterday at the Asean Regional Ar-Rahnu Secretariat Meeting 2010 to share ideas and discuss issues related to Ar Rahnu.

Organised by Bank Islam Brunei Darussalam (BIBD), the meeting was hosted in the Sultanate for the first time since the local Islamic bank became a member of the Malaysia-based Ar-Rahnu Regional Secretariat.

Ar-Rahnu is an Islamic and Syariah-based pawn broking service which provides customers with financing assistance using gold as collateral.

Under the Islamic Economic Development Foundation (YaPIEM), the Regional Ar-Rahnu Secretariat was set up with the objective of providing a regional forum to help streamline the operations of the Ar-Rahnu Scheme. It also aims to be a platform to standardise the operations of "Islamic Pawn Broking" and help overcome arising issues within the secretariat members' level.

Dr Hj Abdul Malik Awang Kechil, director general of YaPIEM and director general of the Regional Ar-Rahnu Secretariat, told The Brunei Times that the meeting reached a consensus whereby the Secretariat Conference Members will increase efforts towards strengthening and expanding the Ar-Rahnu Micro Credit Programme, seeing that the programme is an effective platform for Community Capacity Building in relation to socioeconomic development framework as to ensure the creation of a sustainable community.

He said that efforts in exchanging practical experiences among Secretariat Conference Members and exploring new ideas will also be the main concern and approach in the future, whereby this target will be achieved with the proposal of organising a "Regional Ar-Rahnu Convention for Innovation" in March next year.

Held at the Rizqun International Hotel, 40 delegates representing banks and financial institutions from Indonesia, Cambodia, Timor Leste, Malaysia and Thailand gathered at the half-day forum.

This year's regional meeting is themed "Towards Strengthening the Regional Collaboration".

The Brunei delegation was led by Deputy Chairman of Shariah Advisory Body BIBD Dato Seri Setia Hj Metussin Hj Baki, and the meeting was chaired by BIBD Acting Managing Director Javed Ahmad.

In an interview with The Brunei Times, BIBD Ar-Rahnu Financing general manager Hjh Rosminah Hj Abd Wahid said the Brunei community has been increasingly aware of the benefits of pawning through Islamic banks, and cited that to date, 9,000 customers have been provided for by Ar-Rahnu on an annual basis.

"Our objectives of offering this service are for the Muslims in the country to fulfil 'Fardhu Kifayah' and to help the Brunei community to easily obtain cash advance or fast cash," she said.

BIBD currently offers two micro-financing plans under the Ar-Rahnu programme, namely the Ar-Rahnu Az-Zahab scheme, a Syariah-compliant pawn-broking service launched in 1996, and the Ar-Rahnu Al-Jauhar scheme, which was introduced last year.

"The Al-Jauhar scheme, which caters to BIBD clients and individuals who receive their salaries through the bank, has a minimum financing of $300 a day while the Az-Zahab scheme, open to any Brunei citizen or permanent resident in the possession of gold, is at $100 a day," she said.

Hjh Rosminah assured customers that both schemes are strictly syariah compliant, and a better alternative for people who faced financial difficulties when compared to borrowing from Loan Sharks or other conventional methods of pawning.

"The schemes have a combination of three Islamic concepts to it; Ar-Rahnu (pawn); Qardul Hasan (benevolent loan), which means for example, if the bank lends its clients $1,000, the clients only pays the bank back $1,000; and Al-Wadiah Yad-damanah (savings with guarantee), which means the bank guarantees the clients their gold."

"If you are pawning conventionally and cannot settle your financing, the broker will auction your gold off. We will do the same, but the difference with conventional pawning is that the profits belong to the broker. With Ar-Rahnu, after your gold is auctioned, you get the balance," she added.

According to Hjh Rosminah, the most common reasons for pawning gold among Bruneians are paying off educational and medical fees, settlement of credit card debts in light with the recent credit card curb in the Sultanate, and starting a small business.

The BIBD's Ar-Rahnu Financing division has been actively trying to market the scheme to small and medium enterprises (SMEs) to help them build capital in order to run their businesses.

"We have several success stories of those using the Ar-Rahnu Scheme in Brunei, whereby we have witnessed some families successfully raising money for the purpose of doing small businesses. Similar success stories such as these have also been experienced by the delegates from other countries and was shared during the meeting as proof of the usefulness and effectiveness of the Ar-Rahnu programme," she said.

The delegates are scheduled to visit BIBD Branches today to have a closer look at Ar-Rahnu Businesses that are being provided in the country. The Brunei Times
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