This publication is part of the journal ISRA International Journal of Islamic Finance (English Journal) (2011-2)
The rahn-based Islamic microcredit product is an increasingly popular financing option among small entrepreneurs, lower income groups and gold traders. However, its Shari'ah structure has been sharply criticised by some Islamic scholars despite its success for those who offer it such as Islamic banks and Islamic pawnshops. Hence, it is undeniable that there are some debatable Shari'ah issues that need further examination and immediate solution. In the case of the rahn-based microcredit product, the imposition of a safekeeping fee that exceeds the actual storage cost is considered the most crucial Shari'ah issue that requires scrutiny. Therefore, various takyif fiqhi models have been suggested by Islamic scholars in order to eliminate the ribawi element embedded in this product. This study seeks to gather the different takyif fiqhi models for this product and then identify the preferred opinion as to the most Shari'ah-compliant takyif fiqhi for this Islamic microcredit product.
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