Rahn
رهن
Pronunciation: RAHN
Collateral or pledge — an asset provided as security for a debt or financial obligation.
Definition
Collateral or pledge in Islamic finance. An asset provided by a borrower as security for a financial obligation. If the borrower defaults, the creditor can sell the pledged asset to recover the outstanding amount.
The key difference from conventional collateral is that the creditor cannot benefit from or use the pledged asset during the pledge period (in most scholarly opinions). Any income generated by the pledged asset belongs to the pledgor. Rahn is commonly used alongside Murabaha and other financing structures to provide security.
Related Terms
Kafalahكفالة
A guarantee or surety where a third party assumes responsibility for another's financial obligation.
Dhamanضمان
A guarantee or warranty in Islamic commercial transactions.
Murabahaمرابحة
A cost-plus sale where the seller discloses the original cost and adds a transparent, agreed-upon markup.
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Quick Answer
Rahn (رهن) — Collateral or pledge — an asset provided as security for a debt or financial obligation. Collateral or pledge in Islamic finance. An asset provided by a borrower as security for a financial obligation.
Key Takeaways
- Collateral or pledge — an asset provided as security for a debt or financial obligation.
- Category: Contracts
- Related: Kafalah, Dhaman, Murabaha
- Compare related Shariah-compliant products on HalalWallet
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Reviewed by: HalalWallet Editorial Team
Last reviewed: 2026-03-06
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