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Money Transfer From India

What is HawalaThe word Hawala means trust Its is an alternative or parallel remittance system which works outside the circle of banks and formal financial systems Hawala is an ancient system of money transfer which originated in South Asia and is now being used across the globe This system mainly developed in India before the introduction of western banking practices It is also sometimes referred to as Underground Banking Though it is being used across the world to remit funds but it is not a legal system It works on the basis of many middle men called the hawaldars or the hawala dealers The reason why Hawala is extensively used inspite of the fact that it is illegal is the inseparable element of trust and extensive use of family or regional affiliationsHow Hawala worksHawala works by transferring money without actually moving it In a hawala transaction no physical movement of cash is there Hawala system works with a network of operators called Hawaldars or Hawala Dealers A person willing to transfer money contacts a Hawala operator at the source location The hawala operator at that end collects the money from that person who wishes to make a transfer He then calls upon his counterpart or the other Hawala operator at the destination placecountry was the transfer has to be made Now the hawala operator at the tranferees end hands over the cash to the intended recipient after deducting a certain amount of commission The best way to understand Hawala is through understanding a single hawala transaction For example Chinappa is a taxi driver staying at UK on an expired tourist Visa He wants to remit some money for his family in India Chinappa cannot approach an authorized money transfer agentbank there as he is an illegal immigrant in the UK Thus Chinappa finally lands up at a hawala operators office who not only promises him to deliver the cash to his native place in India at a reasonable commission but also in a very short period of time Chinappa then hands over the cash to the UK hawala operator The UK hawala operator then calls his Indian counterpart and asks him to deliver funds to Chinappas family member Any member of Chinappas family can now collect cash from the Indian Hawala operator after deduction of commission charges and on producing an authentication code which is generally used in all hawala transactions A reverse Hawala transaction can also be initiated where a father approaches the same Indian hawala operator for remitting funds for his son studying in UK through the UK hawala operator In this manner money never actually moves The position of the hawala operators in each others books gets squared off.

harry singh

@ Investor | Posted 13 Jan, 2019 | Finance

Posted By: harry singh (Posted 13 Jan, 2019)

Money Transfer From India


A few years ago, if a construction worker in a Mumbai wanted to send money to his nephew in Dubai, he would have gone to a shop in one of his city's seedier districts. There, he'd hand cash in Indian rupees to a broker in return for a secret code. His nephew would then go to a shop in Dubai, say …

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