Interest-free Banking?

By Moshe Feiglin

“You shall not lend upon interest to your brother: interest of money, interest of victuals, interest of any thing that is lent upon interest. Unto a foreigner you may lend upon interest; but unto your brother you shall not lend upon interest; so that Hashem, your God may bless you in all that you put your hand unto, in the land, Land to which you are going to possess it.” (From this week’s Torah portion, Ki Tetzeh, Deuteronomy 23: 20-21)

The prohibition against lending money with interest is essentially the prohibition against enslavement of another person. “You are children of Hashem, your G-d”. How does a father feel when one son lends money with interest to another? Brothers are expected to help each other – not enslave each other.

And how can a banking system work according to this Torah directive? It can profit from business and charging for services. And who will loan money to individual households? Most of the profits of today’s banks are the products of personal overdrafts. In other words, not from positive business activity, which turns the wheels of the economy. Instead, banks today profit from the enslavement that the Torah attempts to prevent. The solution for private distress must come from outside the banking system; from non-profits and aid organizations, which are already successful today.

And what about mortgages? A mortgage is not a loan to allow ordinary consumption. It makes it possible to establish a home and build a family. In other words, it creates added value. It will be interesting to see how Jewish law will relate to the establishment of a bank that will run according to Torah directives.

Shabbat Shalom.