Awam Mohd Rafi Yaacob
Ghazali Ahmad
Mohamed Dahlan Ibrahim
Ahmad Syakir Junoh
Norwatim Abd. Latiff
Noraesyah Saari
Shamsul Khairi Abu Hassan
R. Zarinatun Mohd Abdul Kader
Norsyeirawani Shari
Islamic Pawn broking industry is still new in Malaysia in which many of the outlets commenced operation actively since 2002. Up until now research pertaining to Ar-Rahnu is limited. Previous study only concentrated on customers’ awareness and satisfaction of providers of the industry. The main purpose of this paper is to study on critical success factors of Ar-Rahnu, providers of micro-credit through Islamic pawn broking practices. Altogether a total of 109 respondents, comprising representatives of Ar-Rahnu outlets throughout Malaysia were selected for the study. The field works were conducted in late 2010 and early 2011. There were 7 organisations involved in the Ar-Rahnu business such as YaPEIM, Bank Rakyat, Agrobank, MAIDAM, PKB, Ar-Rahnu Cooperatives and Franchise Ar-Rahnu Cooperatives. These organizations were further divided into 3 clusters according to nature of their businesses. Data for the study were obtained from survey and SPSS facilitated data analysis. The performance of the Ar-Rahnu outlets under study is measured using variables implicit in the Ar-Rahnu business, including general business operation, types of gold, pawning conditions and charges, security, and internal as well as external control. In general the research found the modus operandi of each and every outlet is more or less similar – having standard operating procedures (SOP). Pawning process is also similar between clusters with each charging safekeeping fee at rates ranging from RM0.50 to RM0.80 for every RM100 of pawn value. A common issues of importance across Ar-Rahnu providers is competency in gold testing because of the presence of imitation gold and gold jewellery. Customer trust is a primary critical success factor (CSF) for all clusters, followed by competitive safekeeping charges, competency of employees, good quality service and strategic location. It was found that securing capital is not an issue for the larger organisations, but it is for the smaller ones.