How do modern banks with Jewish owners get around the problem of interest? Does a customer in Israel, for example, need to have a special agreement or heter for their account?
Shalom, The question of how to run a Jewish bank without breaking the laws of taking forbidden interest has been addressed by many great rabbis of the modern era. On a practical level, all banks in Israel have what is called a "heter iskah". This is a legal document that creates a partnership between the bank and client to the effect that legally the interest is not technically a payment for loan (i.e. interest), but rather profits from the bank's "investment" in the client. You can find an overview of this subject in the "Concise Code of Jewish Law" (Ganzfried, chapter 65-66). As far as I am aware, all banks in Israel utilize such a contract, as do all the credit card companies. I have been told that "heter iskah" used in Israel today has binding legal status according to the secular Israeli law also. Even though there are rabbis who take a strict view about the widespread use of the "heter iskah", its use is standard throughout the Jewish world today, especially in the field of commerce and banking, where additional factors are relevant. These include the fact that it is not clear that the bank as an institution is forbidden to take interest, as opposed to a Jewish individual. Blessings.