Is it permissible for a lender to stipulate with the borrower that along with the debt he must pay him a gift? Meaning, instead of demanding interest, the lender asks that the borrower give him a monetary gift when he repays the loan. Does changing the terminology from "interest" to "gift" suffice to circumvent the Torah prohibition of Ri’bitt (interest)?
Rabbi Moshe Halevi, in his work Milveh Hashem (p. 114), rules that such an arrangement is unequivocally forbidden and likely constitutes a Torah violation of Ri’bitt. The term used in reference to what the lender receives in exchange for granting the loan is purely a matter of semantics; it does not change the fact that the borrower pays compensation for the loan. Regardless of whether the lender and borrower speak of this compensation as a gift or as interest, it nevertheless constitutes Ri’bitt and is strictly forbidden.
This provision applies to Jewish-owned banks, as well. Many banks offer free gifts to new clients when they open an account. They make an initial deposit and in exchange they receive a free gift (such as a toaster or television). A Jewish client may not accept the free gift unless the bank's Jewish owner had signed a "Heter Iska" document which effectively avoids the prohibitions of Ri’bitt. Just as a Jewish client may not accept interest on savings in a Jewish-owned bank without a "Heter Iska," so may he not accept the perks offered by such a bank unless a proper "Heter Iska" has been signed.
Summary: A lender cannot subvert the prohibition against taking interest by making an agreement whereby the extra money paid would be looked upon as a gift, rather than interest.
