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Returning Ribbit With Devalued Currency


Various Rabbis

Av 24 5775
(based on Shut Chatam Sofer, Choshen Mishpat 62)

Case: One of my best students asked about the situation in which, in his youth, he would lend money with interest by using a heter iska (a rabbinical device that structures an ostensible loan into a permitted investment), according to the ruling he received from a rav. After studying the issues involved in Shas and poskim, he has decided to return the interest to the borrowers. In our country, the bank notes have been devalued, and the government has required people to pay a larger sum of money than their original loans’ face value to the point that they return the same value of the original loan (Ed. note – we would call this linked to the inflation rate). However, my student does not have enough money to return the ribbit (interest) according to the increased amount.

Ruling: According to Torah law, one pays a loan according to the original face value and does not adjust it for inflation. This is the case even when the currency is locally disqualified, as long as he can take the money to a place where he can use it (Bava Kama 97b, Shulchan Aruch, Choshen Mishpat 74). The matter is all the more clear when the currency is still valid, just that it is not as valuable as it once was.
The only question is whether one has to apply the rule of dina d’malchuta dina (the law of the kingdom is binding). On this point, we still say as follows. To the extent that we follow the law of the land, there is no obligation to return interest that one received legally. In fulfilling the Torah law of returning ribbit, one can do so according to Torah law, at the face value at which the interest was taken.
However, this is not a simple manner. If the Torah requires payment and dina d’malchuta determines what currency is valid, from a Torah perspective as well, then my student would not be paying properly. The fact that the Torah recognizes dina d’malchuta regarding currencies even in regard to Torah law appears clear from the fact that the gemara (ibid.) assumes that if a currency cannot be used for payment because of disqualification, it also cannot be used to redeemma’aser sheni.
Nevertheless, my student is required to pay only the face value he received as ribbit. Dina d’malchuta is valid in regard to matters that are related to the operation of the kingdom, such as the use of its currency. Had the kingdom not made a decree in regard to payment of a devalued currency, the Torah law would have not required it, but once they did make a decree, we see it as a matter of their discretion, and halacha also requires additional payment. However, regarding the ability of one to repent and return ribbit he took, we have reason to be lenient to enable repentance. Since this type of payment is unusual, we assume that the kingdom did not mean to institute their rule in regard to a type of obligation that they do not recognize legally. Therefore, my student should pay only according to the face value without adjustment for inflation.

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