Overview of Regulatory and Legal Framework of Pawnbroking System in Malaysia
Keywords:
Pawnbroking, Ar-Rahnu, Governance, Legal structureAbstract
The pawnbroking institutions operated as informal credit institutions and benefited primarily those who exclude from the mainstream financial institutions. Established in the year 1811 influenced by the migration of Chinese citizens conventional pawnbroking being a pioneer in Malaysia's financial market and received high demand from the public before the introduction of the Islamic pawnbroking system. Started in the year 1992, the Islamic pawnbroking system or known as Ar-Rahnu has been established due to the high demand from Muslim society. At present, conventional pawn shops and Ar-Rahnu operated parallel in Malaysia's market. Both provide microcredit to their clients. Since its growth, the conventional pawn shop and Ar-Rahnu operators were regulated by different acts and regulators depending on their categories. For that reason, this study aims to identify the current pawnbroking structure and examine the regulatory and legal structure of the pawnbroking system including both segments; conventional and Ar-Rahnu. This study applied a content analysis technique to fulfill the objectives of this study. At the end of this study, it provides a clear understanding of the current structure and legal framework of the pawnbroking system in Malaysia.
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References
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