Gala (Ar-Rahnu) as Micro Financing Instruments in Islamic Financial Institution in Aceh

Gala is a traditional financing model that practiced among Aceh society starting from the 18th century until now. The presence of Gala as an alternative solution to poverty alleviation through Islamic microfinance products should be accommodated by the government either at the provincial or district/municipal. The involvement of local Islamic financial institutions that operate in the region is necessary in order to make Gala as one of recognised Islamic financing instruments. By doing so, the lower and middle-income groups of Aceh society can have an easy access to Gala. They can also conduct business transactions by using Gala as an Islamic financing product at each of Islamic financial institutions. In this research, the researchers made a direct observation in Manggeng and Kuala Batee sub-districts of Aceh Barat Daya district, Indonesia, by adopting the field research approach. Significantly, this research motivates to place traditional Gala as an instrument which is based on Shari’ah as one of Islamic financing products and to bring local wisdom or value to Aceh’s Lembaga Keuangan Syariah or LKS by recognising Gala. Gala, Financing, Islamic microfinance, Islamic Financial Institutions