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Ribis: A Halachic Anthology
Rabbi Joseph Stern

Exemptions from the Ribis Laws

The following sections consider some of the categories that may be exempt from the Ribis prohibition.

A. Deal consummated through a broker

The medieval commentator Mordechai, quoting Rashi, permits Ribis if the loan was conducted through an intermediary. Although Ramo cites this opinion, most authorities disagree with Rashi's assertion, and at the most, consider the use of a broker when other mitigating factors exist (i.e. Ribis is being charged on behalf of a charitable institution). They opine that under no circumstances should a usurious deal be sanctioned merely by virtue of a broker's presence.

B. A Partnership

Virtually all authorities agree that the Ribis provisions apply to a partnership as well as a single proprietor.

The stipulates that any funds obtained on behalf of a partnership from a non-Jew (subject to interest payments) must be borrowed by all partners equally. (For example, if an IOU note is utilized, it must be signed by all.) He reasons that if only one partner were to negotiate directly with one Gentile, he would not be permitted to invest the borrowed funds in the business. In effect, the Gentile intended to lend money to only one Jew. For this Jew to now share the money with his partners, would be tantamount to a Jew's lending another Jew money while charging Ribis.

Corporations - Banks

With the emergence of a Jewish State and financial intermediaries operated by Jews, questions arose as to the permissibility of these institutions' imposing interest on loans and paying any interest to depositors: The larger implications of the question were if commercial banks in Eretz Israel (or Jewish-owned banks in the Diaspora) may operate in a manner similar to their counterparts worldwide, or if a Heter Iska were necessary for every transaction.

Almost a century before the establishment of the State of Israel, Rav Shlomo Ganzfrieds (author of the Popular Kitzur Shulchan Aruch) and the author of Rav Nathanson, debated the merits of this issue, the former prohibiting not only Ribis levied by a Jewish bank but even depositing funds in any financial institution with Jewish stockholders, while the latter strongly disagreed (invoking such Talmudic principles as "Rov" and "Breira"), urging Rav Ganzfried to retract and in future editions of the Kitzur to delete his decision. However, both authorities seemingly agreed that a bank wholly owned by Jews would be subject to the Ribis laws.

However, Some contemporaries of these scholars most notably the Maharam Schick and Rav Shlomo Greenfeld considered a bank's unique status as a corporation; its owners are not personally liable for any debts incurred on their part. Thus any Ribis would not pass from creditor to debtor, but rather from a lifeless entity to real people. This unique state they perceived as a mitigating, but not totally exonerating, factor They allow a corporation to collect (Ribis that is of rabbinic origin) or permits Ribis if the organization is also a charity or acting on behalf of an estate.

Proponents of the unique halachic status of a corporation cite an interesting argument of the Talmud. The Gemara allows a farmer to advance a Kohen or Levi money and then collect the loan by withholding the tithe that they would ordinarily have been entitled to. According to Rav Greenfield's interpretation of the Gemara, the case involves granting an advance in exchange for a guaranteed price on commodities, a rabbinic prohibition of Ribis. Yet, it is permitted on the basis . Since if the farmer experienced such a calamitous harvest that no produce was harvested he needn't give that tithe; even if he can tithe, he is not subject to the Ribis laws. He argues that a corporation is analogous to the above situation; the Ribis prohibition only applies in case of a personal obligation to pay, , not where the corporation's liability is limited to its business assets. Modern authorities, notably the Minchas Yitzchak, dispute the analysis of the law and stress that even according to him only an of Ribis may be suspended for a corporation.

Modern responsa dealing with the corporate status in the eyes of halacha (a topic with ramifications for other areas of Jewish life as well, especially Sabbath observance and ), frequently cite the insight of the renowned Talmudic exegetist Rav Yosef Rosen (Rogatchover Rav). He notes that a Tzibbur (corporate entity) has historically been treated differently than a syndicate of individuals, no matter how numerous. For example, S'micha (laying of hands on a sacrifice prior to slaughter) and T'murah (transference of the sacrificial status of one entity to another) apply only to individuals and not to corporations. However, the Minchas Yitzchak disputes this assertion and maintains that a bank may not collect or pay out interest without benefit of a Heter Iska. He reasons that if individuals retain their statutory rights in a corporate entity (e.g. one is permitted to sell or to bequeath a reserved place in a Shul), surely a Tzibbur never loses its own very personal identity. He notes that a Synagogue congregation conducts the search for Chometz and that it may not pay interest. Evidently corporations are considered as individuals in the eyes of halacha. Rav Pesach Tzvi Frank suggests that although state-owned bank may be exempt from Ribis problems, a privately owned bank is certainly not.

Other authorities (notably the Darchei Teshuva and Rav Yosef Henkin) justify borrowing money from a Jewish bank despite any interest charges. They argue that Ribis can be construed as a fee to help defray the bank's administrative expenses incurring from the loan. Despite the lively theoretical controversy concerning the status of banks and corporations in practice, few if any authorities permit these institutions to charge Ribis, without obtaining a Heter Iska.

D. Charitable Institutions; Estates

In the interests of benefiting philanthrophic institutions and of protecting the rights of heirs not legally competent (generally children), our Rabbis permitted estates and Zedaka organizations to lend money and charge interest if the infraction is mid'rabbanan (of rabbinic origin). Under no circumstances may these institutions engage in deals involving Ribis d'oraitha (prohibited by the Torah) even if the deal is arranged with a broker's assistance.

E. State of Israel Bonds

One of the most popular and efficacious means of financing the State of Israel's burgeoning needs is the sale of bonds. Is a Heter Iska required for every transaction? Rav Pinchas Teitz, writing in Hapardes some 30 years ago, rationalizes the practice of selling Israeli bonds without a Heter Iska on the basis that Ribis implies a known creditor and debtor. Here, however, one cannot identify the individuals backing the bonds. Nor at the time of the transaction does the lender know the debtor's identity. Furthermore, it could be argued that all bonds are sold through a broker, invoking Rashi's opinion that is not prohibited. He also raises the corporate status of the Jewish State, the fact that the Ribis involved in each bond is less than a Perutah (the halachic equivalent of a penny) per citizen of Israel, and interestingly enough, the argument that Arabs are also issuers of Israeli bonds, thus involving a non-Jewish partner in the transaction. However, a respondent in the periodical Hamaor (Jubilee Volume) strongly disputes Rav Teitz's assertion and requires a Heter Iska for bonds.

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