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THE JUDAIC POSITION ON THE CHARGING OF RIBIT (INTEREST): MONEY, LENDING, AND INTEREST IN THE TORAH AND THE JEWISH TRADITION

[1]

Rabbi Yosef Kanefsky leads a Jewish congregation in one of the suburbs of Los Angeles, California. The board of directors of LARIBA contracted him in March 2002 to author a paper that summarizes the prohibition of charging interest on loans in the Jewish tradition. The following is an abbreviated summary of his work published by his permission.[2]

Loans to the Poor

Judaism's teachings about lending money are all based upon the biblical passage in Exodus, Chapter 22, verses 24-26. The verses read as follows:

24. When you lend money to any of my people, to the poor among you, you shall not be to him as a creditor, nor shall you impose upon him any interest.

25. If you take your neighbor's [night] garment as a pledge (collateral), you shall return it to him by nightfall

26. for that is his only covering; it is his garment for his skin. In what shall he sleep? And it shall come to pass, that if he cries unto Me, I will hear it, for I am compassionate.

The word that sets the tone for the entire legal discussion is the word ami — my people — which is found in verse 24. God specifically regards those in need of loans as being His special people, to whom He is very close. The phrase “you shall not be to him as a creditor” is interpreted to mean that the lender is prohibited from reminding the borrower of his dependent status in any way. The borrower is beloved of God, and the lender must bear this in mind. Even a facial expression on the lender's part can constitute a violation of this prohibition.

But the most concrete expression of God's love for the debtor is, of course, the prohibition against the taking of interest. By rabbinical interpretation, not only is the lender prohibited from charging interest, the borrower is prohibited from offering to pay interest. The Torah rejects the entire notion of a loan as a transaction that brings benefit to the lender. According to the Halacha (rabbinical law), a person who either lends or voluntarily borrows with interest is disqualified from being a witness in court.

By rabbinical definition, interest can include considerations aside from cash (Bava Metzia, Chapter 5, Mishna 2). For example, it is prohibited to allow one's creditor to live in and use one's home or workplace rent free. It is even prohibited for the debtor to offer space to his creditor at a discounted rent. These are understood to be gestures through which the creditor realizes benefit from the loan he extended, and therefore are defined as “interest” by rabbinical definition.

It is important to note that all Jewish communities have Free Loan Societies that preserve both the spirit and the letter of the laws on dealing in interest. Often, the local Jewish federations or other community-wide organizations administer these interest-free loan societies.

  • [1] Rabbi Yosef Kanefsky, Los Angeles, California: private communication; an invited paper presented at the LARIBA 2002 Annual Symposium and Awards Symposium, Pasadena, California, March 2002.
  • [2] Published by permission from Rabbi Kanefsky.
 
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