What is the main difference between pledge and Rahnu

• Pledge is used in conventional finance, while Rahnu is used in Islamic finance.

• Pledge is a financial agreement between two parties, while Rahnu is a type of collateral

• Pledge involves a borrower and a lender, while Rahnu involves a pawnbroker and a customer.

• Pledge is a type of loan, while Rahnu is a type of security.

Which of the following statement best describes Kafalah?

• It is a form of insurance

• It is a form of investment.

• It is a form of credit.

• It is a form of guarantee

In Kafalah, who is the guarantor?

• The lender.

• A third party.

• The borrower.

• The bank.

Which of the following is a requirement for Kafalah to be valid?

• The guarantor must have the financial ability to fulfill the obligation.

• The lender must be a bank.

• The borrower must have a good credit score.

• The loan must be secured with collateral.

In Kafalah, the guarantor is responsible for paying back the loan if the borrower defaults on their payments.

• True

• False

Answer explanation

In Kafalah, the guarantor provides a guarantee to the lender that they will pay back the loan if the borrower is unable to do so. This means that if the borrower defaults on their payments, the guarantor will be responsible for paying back the loan amount to the lender.

What is Rahnu?

• A type of loan

• A form of collateral.

• A profit-share agreement.

• A form of insurance.

What is the main purpose of Rahnu?

• To provide long-term financing for investment.

• To provide financing for individuals

• To provide financing for business.

• To provide short-term financing for emergencies.

What happens if the borrower defaults on their loan in Rahnu?

• The lender auctions off the collateral to recover the loan amount.

• The lender keeps the collateral and cancels the loan.

• The lender takes legal action against the borrower.

• The guarantor is responsible for paying back the loan.

How does the Rahnu work?

• The lender gives the borrower cash in exchange for the collateral.

• The lender holds the collateral as security for the loan.

• The borrower gives the lender a promissory note.

• The borrower sells their collateral to the lender.

In Rahnu, the value of the collateral must be equal to the loan amount.

• True

• False

Answer explanation

In Rahnu, the value of the collateral must be higher than the loan amount. This is to ensure that the lender can recover the full amount of the loan in case the borrower defaults on their payments.