Loan Interest in the Modern World
Friday, 12 October 2018
Introduction
The Torah’s prohibition on taking interest is well known. Seen by Chazal as a stealthy form of robbery,[1] one may question whether seeking ways to circumvent the issue is similar to finding ways to give a hechsher to pork.
Nevertheless, not only are leniencies found and implemented widely, but there is very little opposition to them. I have yet to see any recognised poskim who have rejected ‘Heter Iska’ (the mechanism used to evade the prohibition of interest) outright, although some impose certain limitations.
The reason for this is clear. World business revolves around interest. New discoveries and technology often need substantial funds, which could not be raised by generosity alone. The same is true on a smaller scale for private businesses.
Perhaps more critically in some eyes, most individuals in Eretz Yisrael also need to make use of heter iska when they take a mortgage on a home (if the loan is from a ‘Jewish’ bank). Even for those who don’t, avoiding heter iska entirely is almost impossible. Almost every contract signed with a bank or other service provider contains clauses that involve the possibility of paying interest, halachically problematic even if it never ends up being paid.
The most fundamental question that needs to be addressed is whether ideally we would like to change all of this, and abolish interest payments entirely. Secondary issues are the validity of heter iska itself, and whether better alternatives could be found for those interested in the world as it is today.
From Torah Clarity, here.