Pos Malaysia sets up Islamic pawn broking business
Pos Malaysia has agreed a deal with the Islamic bank Bank Muamalat Malaysia to form a joint venture to provide Islamic loans under the Ar-Rahnu system. The new company Pos Ar-Rahnu will offer Islamic pawn broking services in Malaysia’s network of more than 700 post offices.
The Malaysian postal operator has acquired the entire capital of a company by the name of Bright Emerald Sdn Bhd, through which the joint venture will operate, renamed Pos Ar-Rahnu.
The joint venture will be 80% owned by Pos Malaysia, 20% by Bank Muamalat Malaysia, with the Post providing three directors to the bank’s one.
Ar-Rahnu is a system of Islamic pawn broking that allows Muslims in Malaysia to secure loans using precious objects as collateral, to raise money in compliance with the laws of their religion. Gold or other items are then auctioned if a borrower fails to redeem it.
In a statement to investors, Pos Malaysia said its Pos Ar-Rahnu unit would be offering loans based on Syariah principles, as well as acting as an auctioneer or dealer in gold, silver, jewellery and other precious items.
Pos Malaysia explained: “The collaboration would enhance the product offering at Pos Malaysia outlets, besides providing an alternative to distribute micro credit convenience to small-time entrepreneurs who have difficulty in obtaining financing from banks.”
The Post said thanks to its network of post offices, the joint venture could explore “aggressive” expansion through strategic locations.
“Pos Malaysia outlets are not only located at capital States and major towns, but also in small towns and rural areas. Hence, providing higher penetration rates not yet exploited by other players at multiple locations,” said the company.