Shimon was a priority client at his bank and was entitled to receive interest rates above those available to most customers.
Shimon had a relative, Reuven, who – for various reasons – wanted to open an account under a relative’s name.
“I have $15,000 that I want to deposit under a relative’s name,” Reuven said to Shimon. “Are you willing to open such an account in your bank?”
“I could do that,” said Shimon, “but I don’t want to take responsibility for your money if something unexpected should happen.”
“I don’t expect any problem with the bank,” replied Reuven. “Regardless, though, I won’t hold you liable; whatever you earn in the bank I’ll take. Rates now are close to five percent.”
“The truth is, I am actually entitled to a rate of about 5.5 percent,” replied Shimon.
“I’m willing to take five percent and let you keep the extra 0.5 percent,” said Reuven.
“Thank you,” laughed Shimon, “but I don’t need the 0.5 percent. I’m happy to give you whatever the bank gives.”
“So it’s okay with you?” asked Reuven.
“I think so,” said Shimon, “but I have to check whether there’s any issue of ribbis.”
“What do you mean?” asked Reuven.
“You want to hand me $15,000, but the account will be in my name,” explained Shimon. “The bank will be dealing only with me, and then I’ll be returning to you more than you gave me, let’s say $17,000!”
“I hadn’t thought of that,” replied Reuven. “Let’s ask Rabbi Dayan.”
“Can Shimon open an account in his name and give the interest to Reuven?”
“A Jew may not borrow money from another Jew at interest in order to lend it to a non-Jew at interest,” replied Rabbi Dayan. “If Shimon (the middleman) bears responsibility to Reuven, there is a lender-borrower relationship between them, so that ribbis is prohibited.”
“However, Shulchan Aruch (Y.D. 168/9:13) writes that if a non-Jew hands a collateral to a Jew and asks him to take a loan from another Jew, and all the liability is on the collateral, so that the middleman bears no financial responsibility to the Jewish lender – it is permissible. In such a case, Shimon does not borrow from Reuven but merely serves as his agent to grant the loan to the non-Jew. Although the Gemara (B.M. 71b) teaches that a non-Jew cannot appoint an agent, here Shimon serves as Reuven’s agent.
“Shach (Y.D. 168/9:34) adds that even if the non-Jew does not hand Shimon a collateral, but Shimon makes clear that he does not bear any responsibility for the loan and the full liability is on the non-Jew, it is permissible.
“Similarly, in our case, if Reuven knows where the money will be deposited, and merely gets whatever interest is received from the bank – Shimon is considered his agent to lend to the bank, and it is permissible. “If Reuven does not know details where the money will be deposited, the parties must explicitly state that Shimon does not bear any personal liability (Toras Ribbis 17:18-20).
“Alternatively, when the borrower does not need or benefit from the loan, but rather the “loan” is only to benefit the lender, Rif writes that there is no violation of ribbis. Here, also, Shimon has no benefit from the money that he receives from Reuven, but rather, does him the favor of opening the account in his name, so it is permissible. This rationale, though, would not allow Shimon to take a “cut” and ask for some of the interest from the bank, since then he also benefits from receiving the money from Reuven (Rema Y.D. 166:3; Bris Yehudah 2:[48]).
“According to the first rationale, though,” concluded Rabbi Dayan, “Shimon can stipulate that he retain part of the interest that is received from the bank, even though all the interest is due Reuven since he is not a borrower from Reuven, only his agent.”
Verdict: A Jew can serve as an agent for another Jew to lend money to a non-Jew at interest, provided that the middleman does not bear responsibility for the money.
