BILLIONS IN LIMBO: Only 19 of 109 Israeli Gemachim Licensed as Regulators Face Questions Over Years of Delays
Nearly four years after more than 100 gemachim applied for government licenses, the overwhelming majority are still awaiting final approval, raising concerns about the slow pace of regulatory oversight in a sector that handles billions of shekels in loans and deposits for Israel’s chareidi community.
New figures obtained through freedom-of-information requests reveal that just 19 of the 109 gemachim that submitted licensing applications to Israel’s Capital Market Authority in 2022 have received licenses. The remaining 90 have yet to complete the approval process.
The findings, first reported by journalist Nati Tucker of TheMarker, have drawn attention to the challenges facing regulators as they attempt to supervise a financial network that plays an essential role in the daily lives of thousands of frum families.
The gemach system, built around interest-free lending and communal assistance, provides financing for weddings, housing expenses, family emergencies and other significant needs. Many institutions also accept deposits from individuals who place money with a gemach to support its lending activities.
The combined financial activity of the sector is estimated at approximately 5 billion shekels, making the licensing delays particularly consequential.
Although the government introduced a licensing framework intended to establish clearer oversight of gemachim, the latest figures suggest that implementation has proceeded far more slowly than anticipated.
The licensing delays have been a subject of dispute between government regulators and Knesset members for years. Representatives of the gemachim have complained that the absence of licenses has complicated their relationships with banks, even when the institutions have been operating for years and have submitted the required applications.
At a Knesset Finance Committee hearing in December 2025, lawmakers pressed the Capital Market Authority over the prolonged delays. Officials explained that the necessary anti-money-laundering regulations had to be finalized before licenses could be issued.
During that hearing, a senior authority official clarified that gemachim operating before the licensing framework took effect in 2022, and which had submitted the appropriate applications, could continue operating while their applications were reviewed.
That distinction is significant. The fact that an institution has not yet received a final license does not necessarily mean it is operating unlawfully.
The regulatory process has begun moving forward in recent weeks. In September, the authority issued its first seven licenses to qualifying gemachim. By October 20, the number had increased to 19.
The authority says additional applications are undergoing review and that it intends to continue issuing licenses to institutions meeting the requirements.
The government has also formally initiated a two-year transition period for new anti-money-laundering obligations. Under the framework, licensed gemachim will eventually be required to implement procedures for identifying customers, documenting transactions, monitoring financial risks and reporting certain activities to regulators.
The transition period follows the publication of an official notice announcing the commencement of licensing, with the new requirements scheduled to take effect in October 2028.
Regulators say the rules are intended to protect depositors and borrowers while preserving the distinctive character of gemachim, which operate without charging interest and often depend heavily on donations and volunteer administrators.
The Capital Market Authority has acknowledged that gemachim occupy a unique position in Israel’s financial system, providing interest-free loans through institutions generally built around close-knit communities and longstanding relationships of trust.
Unlike conventional financial institutions, many gemachim rely on guarantors rather than interest-based lending arrangements to manage financial risk.
The authority says its supervisory framework is designed to account for those differences while introducing standards intended to protect the public and prevent financial misconduct.
At the same time, regulators have begun enforcement proceedings against institutions suspected of violating existing requirements, including issuing notices of hearings to certain operators.
The licensing issue has attracted particular attention from chareidi lawmakers, who have argued that excessive bureaucracy could interfere with a system of communal assistance that provides critical financial support to families.
During previous Knesset discussions, MK Moshe Gafni and MK Simcha Rothman urged officials to expedite the process and permit gemachim to receive licenses while the remaining regulatory requirements were being implemented.
Rothman accused regulators of creating a situation in which institutions were being denied licenses because the government had not yet completed the regulations necessary to issue them.
The latest figures underscore how much work remains. With only 19 licenses issued and 90 of the original 109 applicants still awaiting approval, the process is far from complete.
For the thousands of families who depend on gemachim to finance weddings, purchase homes or manage major expenses, the outcome of the regulatory process could have substantial consequences.
The central challenge facing Israeli authorities will be to establish meaningful financial oversight without undermining the interest-free lending institutions that have served as a cornerstone of chareidi communal life for generations.
{Matzav.com}
