Definition of Interest According to the Torah and Rabbinic Ordinances
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Question
What is interest according to the Torah? And what is interest according to rabbinic ordinances?
Answer
Interest according to the Torah is when the lender gives the borrower 100 shekels and at the time of the loan requests the borrower to return 120 shekels, and this is called fixed interest. Rabbinic interest is when at the time of the loan, the borrower does not agree with the lender on a profit, but on his own provides a benefit to the lender for the loan, and this is interest prohibited by rabbinic ordinances.
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