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Determinants of Ar-Rahnu Profit

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Submitted By raille
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CHAPTER 1 INTRODUCTION
1.0 INTRODUCTION
This chapter discusses on the introduction of this study. This includes the background 0f the study, background of the Bank Rakyat, problem statement, objectives of the study, research questions, and significance of the study. This chapter also discusses on scope and limitations of study and definition of term. 1.1 BACKGROUND OF THE STUDY
For the past few years, a pawn broking has taken place in our country. It has been started since the 15th century which was introduced by the Chinese traders during the Malacca Sultanate. Then, it continued to expand after the discovery of tin mining in Larut in the 19 century. Pawn broking can be traced back to at least 3,000 years in ancient China. It also has been found in the earliest written histories of Greek and Roman civilizations.
According to the Islamic Financial Services Board (IFSB), the Ar- Rahnu scheme can demonstrate its roles as a viable microcredit product of the financial institution in meeting the different customer requirements. Firstly, it represents a credit channel to those who want to use Ar-Rahnu scheme to obtain financial resources to meet their daily financial requirements; and secondly, it can be a credit channel to those who requires temporary working capital, particularly for small business. The objective of Ar-Rahnu is to create an alternative financing channel to the conventional pawn broking, that is not only more transparent but it also more compliant with Shari’ah principles. Ar-Rahnu is a form of microcredit product the borrower places their valuable assets such as gold or jewellery as collateral for the financing. In conventional pawn broking, the interest is charge based on the loan. On the other hand, Ar-Rahnu has no interest but it charges on safekeeping service.

1.2 BACKGROUND OF THE ORGANIZATION 1.3.1 BANK RAKYAT
Bank…...

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