Is taking interest from bank a sin?

Question

In Hinduism, is regularly depositing some money in a PPF account with the intention of getting handsome interest when we retire, a sin?

I came across this blog post that says:

A Brâhmana and a Kshatriya shall not lend anything at interest...

'He who acquiring property cheap, gives it for a high price, is called a usurer and blamed among those who recite the Veda.'

'God weighed in the scales the crime of killing a learned Brâhmana against the crime of charging interest; the slayer of the Brâhmana remained at the top, the charger of interest sank downwards.'

(Vasishtha, The Sacred Laws of the Aryas, Part II, Chptr 2, vs 40-42)

 

A person of yoga obtains everlasting peace by abandoning the rewards of action. The person ignorant of yoga, selfishly attached to reward, remains bound.

(Bhagavad Gita 5:12. This verse, in fact, is representative of the very theme of the Bhagavad Gita)

Please clear my doubt.

Answer 1

Lending at interest is not a sin at all. Its perfectly legitimate. But usury (lending money at unreasonably high rates) is a minor sin(an Upapataka).

Manu Smriti 10.115. There are seven lawful modes of acquiring property, (viz.) inheritance, finding or friendly donation, purchase, conquest, lending at interest, the performance of work, and the acceptance of gifts from virtuous men

Manu Smriti 11.61. Defiling a damsel, usury, breaking a vow, selling a tank, a garden, one’s wife, or child,.....(are all) minor offences, causing loss of caste (Upapataka)(11.66)

The Yajnavalkya Smriti also lists usury among minor sins.

13 — 20. There are many Upapātakas (minor sins and turpitude)....learning from a servant, teaching a superior, adultery, usury, sale of salt, contemptuous livelihood, misappropriation of a deposit, breaking of a vow, sale of meat, sale of a cow, abandonment of father, mother or a friend, sale of tanks and parks, selling of daughter's ornaments, crookedness, causing others to break their vow...(Yajnavalkya Smriti)

Update 1-More relevant verses:

Manu 8.140. A money-lender may stipulate as an increase of his capital, for the interest, allowed by Vasishtha, and take monthly the eightieth part of a hundred.

Manu 8.155. If he cannot pay the money (due as interest), he may insert it in the renewed (agreement); he must pay as much interest as may be due.

The Parashara Smriti says;

63. To invest money on interest, to be a jeweller, to tend cattle, tillage and trade, — these are declared as occupations for the Vaisya caste,

The verse(partly mentioned in the question) which is attributed to Vashishta is also present in the Manu Smriti. One should always read the full verse,the full scripture. Otherwise it can be misleading.

Manu Smriti 10.117. Neither a Brahmana, nor a Kshatriya must lend (money at) interest; but at his pleasure (either of them) may, in times of distress when he requires money) for sacred purposes, lend to a very sinful man at a small interest.

Update 2- I also have the Vashista Dharma Sutras downloaded from Astrojyoti.com. Now here's how they have translated the verse mentioned in the question:

41. Now they quote also (the following verses): ‘He who acquiring property cheap, gives it for a high price, is called a usurer and blamed among those who recite the Veda.’
42. ‘(Brahman) weighed in the scales the crime of killing a learned Brâhmana against (the crime of) usury; the slayer of the Brâhmana remained at the top, the usurer sank downwards.

As one can see it only talks about usury which is already discussed in this answer and which the Scriptures declare as a (minor) sin.

Now,see what is being told in the next verse from the same Dharma Sutra:

43. Or, at pleasure, they may lend to a person who entirely neglects his sacred duties, and is exceedingly wicked, 43

So,basically these verses say the same thing which Manu 10.117(given above) says.

And,the verse from Parashara Smriti ,about lending money at interest, given above, is also repeated in the Vashista Dharma Sutra:

18. (The lawful occupations) of a Vaisya are the same (as those mentioned above, Sûtra 16),
19. Besides, agriculture, trading, tending cattle, and lending money at interest,

So,again the same thing,one should not come to a conclusion after only reading parts of a Scripture.

Answer 2

Hindu scripture condemns charging of exorbitant rates of interest and not reasonable rates of interest.

Bhishma said, '..They who betakes themselves to improper conduct, they who take exorbitant rates of interest, and they who make unduly large profits on sales, have to sink in hell.'

Mahabharata Anusasana Parva Section XXIII

Answer 3

The interest which we get in PPF or other banking sector is a way for RBI/Govt. to ...

• Check inflation: If too much of money is floated in economy, then prices of goods will increase, which will increase inflation; By promoting better interest rates in savings, people will be inspired to reduce spending
• Promoting white money: All money is accounted when deposited to bank; This avoids any parallel economy
• Funding for infrastructure: When banks have so much of fund, it can be lent to govt. for improvement on infrastructure & other schemes

Hence, the interest rates which we get is actually the healthy & ethical return for 'investing' our money. In fact, Einstein called the "Compound interest as the 8th wonder of the world".
Until this there is nothing to do with Hinduism.

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However, giving away loans on interest is considered unethical at least by Islamic banking (& may be Christians as well). Such kind of loans have shattered many lives during modern era of India prior to independence.

One small reference is found in ShAnti Parva, which disapproves this practice if done unreasonably:

The food provided by a usurer (who lends money at unreasonably high rates of interest) is equivalent to dirt.

However in modern era, most of thelegal banking sectors & their customers are protected by respective governments. Hence not to worry!

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Your analysis on Gita verse 5.12, may be true in some context, but that verse is too generalised for your specific question. Here is the better translation (from Gambhirananda):

BG 5.12 - Giving up the result of work by becoming resolute in faith, one attains Peace arising from steadfastness. One who is lacking in resolute faith, being attached to the result under the impulsion of desire, becomes bound.