The comparative study between Islamic pawnshop (Ar-Rahnu) and its conventional counterpart: a case study in Kota Bharu Kelantan / Mazura Mohamed

The policy makers have recognized that finance is a powerful instrument to achieve economic and social objectives, and have channeled funds to finance investment in priority sectors. The evidence shows that the rural and urban economy still relies on pawnshop credit. This research is carried out in order to determine the acceptance of customers toward the product and service. The product mentioned is Islamic pawn, offered by Ar-Rahnu Bank Rakyat. The bank offer their product in order to fulfill the customers need. Thus the pawnshop was established consistently with lslamic regulation. The operation of Ar- Rahnu scheme will be discussed in detail in order to conform and proved to the
customers that the business transaction are free from usury and give priority to the customer's welfare. The differences between Islamic pawnshop and convetional pawnshop will be discussed thoroughly to expose the customers that econventional pawnshop implement the practice of repression, deception and exploiting them for the purpose of making profit. Generally, Bank Rakyat through Ar-Rahnu scheme is able to show their consideration and systematic operation to the customers. Since the scheme are developing a permanent financial linkage for the society, they will strive to improve their services in order to compete with conventional pawnshop.