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Taking Interest: Difference between revisions
From Halachipedia
→Lending Commodities for Other Commodities
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# It is rabbinically forbidden to lend items for the same quantity of that item.<ref>Shulchan Aruch 160:21</ref> | # It is rabbinically forbidden to lend items for the same quantity of that item.<ref>Shulchan Aruch 160:21</ref> | ||
# It is Biblically forbidden to lend an item for a greater quantity of that item. For example, lending 100 apples for 120 apples is Biblical interest.<ref>Shulchan Aruch YD 160:21</ref> | # It is Biblically forbidden to lend an item for a greater quantity of that item. For example, lending 100 apples for 120 apples is Biblical interest.<ref>Shulchan Aruch YD 160:21</ref> | ||
# It is forbidden to lend an item to get back the same type of item. This is called ''Seah B'seah''. For example, lending out a 5 pound bag of flour to get back another bag of flour is forbidden.<ref>Bava Metsia 75a</ref> | # It is forbidden to lend an item to get back the same type of item. This is called ''Seah B'seah''. For example, lending out a 5 pound bag of flour to get back another bag of flour is forbidden.<ref>Bava Metsia 75a</ref> | ||
# This type of rabbinic ribbit is permitted if the borrower has some of the same type of the item he is borrowing. For example, if someone has one egg and wants to borrow five more eggs they can do so since they already have one.<ref>Bava Metsia 75a</ref> | # This type of rabbinic ribbit is permitted if the borrower has some of the same type of the item he is borrowing. For example, if someone has one egg and wants to borrow five more eggs they can do so since they already have one.<ref>Bava Metsia 75a</ref> | ||
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# If the lender demands the borrower to repay the loan specifically at a time when the commodity is more expensive in price that it is certainly forbidden unless the borrower has some of the commodity.<ref>Rosh, Shach 162</ref> | # If the lender demands the borrower to repay the loan specifically at a time when the commodity is more expensive in price that it is certainly forbidden unless the borrower has some of the commodity.<ref>Rosh, Shach 162</ref> | ||
# If the lender demands the borrower to repay the loan specifically at a higher price it is forbidden unless the borrower has some of the commodity.<ref>Kol Bo and Smak, Rama 162:3</ref> | # If the lender demands the borrower to repay the loan specifically at a higher price it is forbidden unless the borrower has some of the commodity.<ref>Kol Bo and Smak, Rama 162:3</ref> | ||
===Stocks=== | |||
# Short selling is a violation of borrowing commodities with interest. This type of transaction between two Jews is forbidden since the leniencies of borrowing commodities, namely, having a fixed market price that endures for a long time or having a position in that the stock one is short selling, are inapplicable.<ref>[https://traditiononline.org/short-selling-and-jewish-law/ Rav Aharon Levine (Tradition Spring 2010 pp. 67-71)] explains that short selling involves borrowing a commodity which is repaid with that commodity and not merely a cash loan. The commodities in this case are the stocks being sold short. Since the marketplace price is in flux constantly that doesn't permit the seah b'seah transaction. Additionally, the fact that selling outside the box is illegal prevents a person from shorting a position he already owns stock in. Therefore, it isn't possible for someone to have the stocks that he is borrowing while doing a short sell.</ref> For a Jewish marketplace this is a serious issue because either way there is an interest charge for borrowing the stocks for the time. Therefore, these issues need to be solved with a heter iska.<ref> [https://www.toraland.org.il/%D7%A9%D7%90%D7%9C%D7%95%D7%AA-%D7%95%D7%AA%D7%A9%D7%95%D7%91%D7%95%D7%AA/%D7%9B%D7%9C%D7%9B%D7%9C%D7%94-%D7%95%D7%9E%D7%A9%D7%A4%D7%98/%D7%9B%D7%9C%D7%9B%D7%9C%D7%94-%D7%95%D7%94%D7%9C%D7%9B%D7%94/%D7%9E%D7%9B%D7%99%D7%A8%D7%94-%D7%91%D7%97%D7%A1%D7%A8/ toraland.org.il] cites Torat Ribbit 17:33 that since stocks don't represent ownership of the company it isn't considered ribbit or seah bseah. However, since there's a payment of interest for the value of the stocks that is certainly considered interest and requires a heter iska.</ref> | |||
# Buying stocks on margin is forbidden if the brokerage is Jewish since it is lending to the investor money to be able to buy the shares and charging them interest for that loan. This is Biblical interest, but it can be permitted with a heter iska.<ref>Laws of Interest 1:25, Mishnat Ribbit p. 62</ref> A regular heter iska doesn't work for this case.<ref>Mishnat Ribbit p. 62</ref> | |||
# If a person leaves money in a Jewish investment account and it accrues interest leaving money there is forbidden since that would be Biblical interest. However, this transaction can be permitted with a heter iska.<ref>Laws of Interest 1:24, Mishnat Ribbit p. 62</ref> Some poskim would permit collecting interest if the brokerage firm is incorporated.<ref>Laws of Interest 1:24 based on Rav Moshe (Igrot Moshe 2:63)</ref> | |||
==Involvement with Interest== | ==Involvement with Interest== | ||
