Rahn

Rahn (Arabic: رهن, literally 'pledge' or 'mortgage') is an Islamic collateral arrangement in which a borrower pledges an asset to a creditor as security for a debt. The pledged asset (Marhun) remains in the possession of either the pledgor or pledgee depending on the contract structure, while ownership stays with the pledgor. Rahn forms the Shariah basis for Islamic secured lending, mortgage products (home finance), and pawnbroking (Ar-Rahnu). In Islamic home finance, the property serves as Rahn for the underlying financing obligation. Ar-Rahnu (Islamic pawnbroking) is a widely used retail product across Malaysia and Gulf countries, offering collateral-based cash advances without interest — the customer pays a safe-keeping fee (Ujrah) instead. The pledgee cannot profit from use of the Marhun and must return any excess proceeds from sale of collateral above the debt amount. Governed by AAOIFI Shariah Standard No. 39.