It is perhaps ironic that an ancient South Asian banking system which had earned a reputation for trust should today be widely regarded as an opprobious marker of the black market economy. Also known as hawala, havala, or havale, hundi's disrepute is relected in the in the many villainous descriptions awash in the in the international press: 'illegal financial transactions market', 'black money' and 'drug money', 'system of tax evasion', illegal transfers of foreign exchange', 'illegal money laundering network' and Hindi word meaning 'providing a code'. In a similar vein, the descriptions of hawala and hundi as informal or alternative have developed because they are perceived as both unofficial and lacking in legal accountability. The confusion does not cease there; there is not universal agreement over whether hundi and hawala are in fact the same, and just as press descriptions have been wildly different, this uncertainty has much to do with diverging opinions of what hundi and hawala respectively are.
In many ways, the notoriety collected by hundi and hawala is connected to broader disparaging connotations of the words informal or unorganised. Some scholars have argued that such negative connotations arise from the persisting dominant view that indigenous or traditional banking and its instruments were primitive and inefficient. Yet, whilst developments in modern banking appear to render hundi obsolete, emerging contemporary studies that demonstrate the continued use of hundi/hawala indicate otherwise.
The critical problem lies in definition. As there is an incomplete understanding of hundi/hawala's form and remit, there is also a rather limited understanding of why the system persists, set against the backdrop of modern banking. In turn, this presents enormous difficulties for law enforcement and financial regulatory authorities. Problems of definition also presented legal and financial authorities of the early and twentieth century with core issues which remain unresolved for authorities in the twenty-first century. More on these legacies soon...
In many ways, the notoriety collected by hundi and hawala is connected to broader disparaging connotations of the words informal or unorganised. Some scholars have argued that such negative connotations arise from the persisting dominant view that indigenous or traditional banking and its instruments were primitive and inefficient. Yet, whilst developments in modern banking appear to render hundi obsolete, emerging contemporary studies that demonstrate the continued use of hundi/hawala indicate otherwise.
The critical problem lies in definition. As there is an incomplete understanding of hundi/hawala's form and remit, there is also a rather limited understanding of why the system persists, set against the backdrop of modern banking. In turn, this presents enormous difficulties for law enforcement and financial regulatory authorities. Problems of definition also presented legal and financial authorities of the early and twentieth century with core issues which remain unresolved for authorities in the twenty-first century. More on these legacies soon...
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