Optimizing Shariah Governance Practices in Ar-Rahnu Cooperatives; Insight into Structure, Guideline Adherence, and Challenges.

Year 2024, Volume: 2 Issue: 2, 123 - 133, 24.12.2024

Nor Fadilah Bahari , Zurina Shafii Mustafa Mohd Hanefah

Abstract

This paper aims to examine Shariah governance practices in Ar-Rahnu cooperatives. It would also analyse the challenges encountered by Ar-Rahnu cooperatives in implementing effective Shariah governance, including regulatory constraints, and operational complexities. The study employed multiple case studies and selected four different categories of Ar-Rahnu cooperatives as a sample. Data collection strategies were based on interviews with Ar-Rahnu cooperatives' key governance organs and documents. The data was analysed using thematic analysis and content analysis. The study's results indicate that the Ar-Rahnu cooperatives have progressively strengthened their Shariah governance. However, a few areas, like Shariah risk and audit, demand greater focus from Ar-Rahnu cooperative management. The recommended strategies that may bolster Shariah governance and compliance procedures are to entrench Shariah culture, enhance awareness, improve Shariah competency within the management of cooperatives and regulators' duties to reinforce the current Shariah legal elements for cooperatives. Also, together with positive support from regulators who provide a comprehensive Islamic legal and regulatory system. This study provides valuable insights for practitioners, policymakers, and researchers working in the Islamic pawn broking industry and cooperative studies. Furthermore, it would propose potential future directions and innovative solutions to improve Shariah governance and assurance in Ar-Rahnu cooperatives.

Keywords

Shariah Governance, Ar-Rahnu, Cooperatives, Challenges.

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