Banking
The Torah has specific laws regarding banking and interest that stem from its broader ethical and moral teachings. Here’s a summary of the relevant principles:
Prohibition of Charging Interest:
Exodus 22:24: "If you lend money to any of My people who are poor among you, you shall not be to him as a creditor; neither shall you lay upon him usury."
Leviticus 25:36-37: "Take no interest from him or increase, but fear your God, that your brother may live with you. You shall not give him your money at interest, nor lend him your food for profit."
These verses prohibit Jews from charging interest on loans to fellow Jews. This is intended to foster a sense of community and support among members of the same faith.
The Law of Torah should adopt principles derived from Islamic Banking law:
Profit and Loss Sharing:
A partnership where one party provides capital while the other provides expertise. Profits are shared according to an agreed ratio, but losses are borne only by the provider of the capital.
A joint venture where all partners contribute capital and share profits and losses according to their respective shares. It encourages active participation and collaboration.
Asset-Backed Financing:
Cost-plus-profit arrangements where the bank buys an asset and sells it to the customer at a profit margin agreed upon in advance. The customer pays the price in installments.
Leasing arrangements where the bank buys and leases out an asset. The bank retains ownership, while the customer pays rent for using the asset. At the end of the lease period, the customer may have the option to purchase the asset.
Risk Sharing:
Jewish insurance should operate on the basis of mutual cooperation and shared responsibility. Participants contribute to a pool, which is used to cover losses or damages, and surplus funds are shared among participants.
Avoidance of Uncertainty:
Refers to excessive uncertainty or ambiguity in transactions. Jewish banking contracts should be designed to be clear and transparent to avoid any ambiguity that might lead to disputes.
Ethical Investment:
Ethical Investments: Investments must be in businesses or assets that are considered kosher (permissible).
Charity:
Jewish banks may also engage in charitable activities and ensure that a portion of their profits is distributed as an obligatory form of almsgiving.
Governance and Compliance:
Supervisory Board: Jewish banks should have a board comprising scholars who ensure that all banking activities comply with Jewish principles. They provide guidance and oversight on the bank’s operations and financial products.
Jubilee Year and Debt Forgiveness:
Leviticus 25:10: "And you shall sanctify the fiftieth year, and proclaim liberty throughout the land to all its inhabitants; it shall be a jubilee for you; and each of you shall return to his possession, and each of you shall return to his family."
In the Jubilee Year, all debts are forgiven, and land is returned to its original owners. This practice ensures that economic disparities are mitigated over time and that families do not become permanently impoverished due to debt.
Ethical Conduct:
Deuteronomy 24:6: "No man shall take the mill or the upper millstone as a pledge; for he takes a man's life as a pledge."
This verse emphasizes that essential tools for making a living, like millstones, should not be used as collateral for loans. Such practices would endanger the borrower’s ability to sustain themselves.
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