Reconstructing the implementation of sharia principles in Islamic gold pawn practices through rahn and ijārah

Abstract

Background: Islamic gold pawning in Indonesia provides short-term financing intended to comply with Sharia principles. However, gaps persist between formal compliance and substantive adherence to fiqh mu‘āmalah and maqāṣid al-sharī’ah. This study examines the implementation of rahn and ijārah and proposes a model that better reflects substantive compliance. Methods: This study employed a normative-empirical (socio-legal) approach, analyzing fiqh mu‘āmalah literature, DSN-MUI fatwas, Financial Services Authority regulations, contract documents, fee-setting policies, and institutional practices. Qualitative analysis identified discrepancies between normative principles and empirical practices through the maqāṣid al-sharī’ah framework. Findings: Islamic gold pawning remains predominantly formalistic, with ijārah potentially functioning as a revenue-generating mechanism. Linking fees to loan values or gold appraisals rather than actual service costs blurs the distinction between service charges and additional benefits from qardh, potentially undermining justice, asset protection (ḥifẓ al-māl), and social welfare. Conclusion: Substantive Sharia compliance requires separating social and commercial contracts, basing ijārah fees on actual service costs, and integrating maqāṣid al-sharī’ah into institutional policies and operations. Novelty/Originality of this article: This study proposes a reconstructed implementation model linking contractual separation, cost-based ijārah pricing, and maqāṣid al-sharī’ah to strengthen substantive Sharia compliance in Indonesian Islamic gold pawning.