Will the institution known as the "gmach" be coming to an end? I don't think so, but it looks like the government is fighting the free-loan phenomenon.

The truth is that it is not fighting the free-loan aspect of the gmach. Rather, many gmachs have gone way beyond what was the original purpose of their existence, the interest-free loans, and have been expanding their services to include all sorts of services on the edge of what might be considered actual banking.

The problem with offering banking services is that with no regulation, the person giving the money to the gmach is at extreme risk of losing it. There have been some very public cases of such organizations (sometimes gmachs and sometimes not) going under, causing serious loss to many investors.

The Marker has revealed that a new directive is being put into place by which any organization that holds deposits will not be able to be granted a certificate of proper administration - "Ishue Nihull Takin".

The main problem is with the gmachs in the haredi sector.

The reason for the change in the directive is due to being in the middle of a process of putting the gmachs through a legal process to make them official. For the meantime, it was decided, they will not move to dismantle these gmachs but will refuse to grant the ishur nihul takin.

The problem with these organizations for which they cannot be given such an ishur is that by taking the deposits of money, and by giving out loans to more than 30 people, they have entered the category of banking transactions, and as long as the gmachs have not yet been declared legal institutions for such transactions, the organizations running them cannot receive the ishur nihul takin.

Not having this ishur means the organization - not just the gmach but the organization running the gmach, will not be able to receive any governmental support and will not be able to provide any services to government offices.

I don't think they will close the gmachs. I don't think they will be able to close the gmachs, even if they were to try. The gmachs, the interest-free loans, help a lot of people, and it is a mitzva as well. People will find ways to continue giving and getting these interest-free loans. Perhaps they will need to be decoupled from the larger organizations, or separated somehow by forming subsidiaries or whatnot, but they will find a way to continue operating the gmachs and circumvent this problem.


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