Sharia-Compliant Pawnbroking: History, Legal Basis, Products, and Operational System

Abstract

This study analyzes the historical development of rahn, its legal foundations, product diversification, and the operational system of Islamic pawnshops in Indonesia. It employs library research with a descriptive-analytical approach. The data are derived from the Qur'an, hadith, classical and contemporary Islamic commercial jurisprudence, fatwas of the National Sharia Council of the Indonesian Ulema Council, national regulations, and scholarly literature on Islamic financial institutions. Data were collected through documentation and analyzed by classifying normative provisions and institutional practices. The findings indicate that rahn has been practiced since the time of the Prophet Muhammad and was subsequently developed in Islamic jurisprudence as a collateral instrument based on mutual assistance. In Indonesia, Islamic pawnshops gained legitimacy through DSN-MUI Fatwas No. 25 and 26 of 2002, the Compilation of Sharia Economic Law, and financial-services regulations. Their products now include Rahn, Arrum, Amanah, Mulia, and Gold Savings. The principal distinction from conventional pawnshops lies in separating the qardh contract from maintenance and safekeeping charges under ijarah or mu'nah, thereby avoiding interest-based lending.