We spoke with Rabbi Maxim Cohen, awarding- winning finance specialist and founder of The Jewish Lending Institute – an organisation aimed at the education and regulation of the Jewish Lending.
Hello Rabbi Maxim, lovely to speak with you again! Tell me… what is kosher lending?! Is it borrowed salt- beef?
Hello! Not quite! But yes, to many people keeping kosher is all about food – not mixing milk and meat, two sinks, and lots of pots and pans! But not many people know that keeping kosher stretches much further, all the way to the money they lend and borrow! In fact, Jewish law, encompasses every aspect of daily life, including financial transactions. The Torah prohibited the lending of money with interest to Jewish borrowers. To this, the Rabbis instituted many guidelines to ensure both ethical conduct and the adherence of Jewish Law in lending.
Ok great – so how can I make my lending kosher?
Enter the Heter Iska! As economic systems evolved, Jewish lenders sought ways to participate in economic activities while still adhering to religious obligations. The Heter Iska (a legal document) was developed as a mechanism to address this challenge. It allowed lenders and borrowers to structure their financial transactions in a way that complied with Jewish law, enabling lenders to receive returns on their investments while avoiding the explicit charging of interest. Under a Heter Iska agreement, the lender and borrower enter a partnership rather than a conventional loan arrangement. Instead of charging interest, the lender becomes a partner in the borrower’s business venture or investment. The lender’s funds are treated as capital invested in the partnership, and the borrower assumes the role of the active partner managing the business operations.
Are all Jewish lenders kosher?
Not yet! That is why I founded the Jewish Lending Institute. There is not a day that goes by that I don’t speak with Jewish lenders who want to offer kosher lending but don’t know what to do or how to do
it. We are working with leading Rabbinic experts to make it easier for more Jewish lenders to become Heter Iska compliant and also help borrowers identify lenders that are offering kosher lending.
So, what is next for the Jewish Lending Institute?
Our main goal is to streamline the process for Jewish lenders becoming kosher lenders! Together with our Rabbinic experts, we are working on standardising the processes and documents used by Jewish lenders – allowing them to incorporate as many Rabbinic opinions as possible (and there are many!) and assuring borrowers that the highest level of Kashrut is adhered to. In addition, we want to instill a higher ethical standard to our Jewish lenders – as this is the core lesson we learn from Ribbis (interest on lending). Finally, we are developing an easy-to-use website, where borrowers and brokers can identify kosher lenders. There will also be an interactive learning area to educate about Ribbis and Heter Iska.
If anyone wants to get involved or find out more information about The Jewish Lending Institute, please email admin@ jewishlending.org.uk