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Hundi/Hawala: The Problem of Definition1


In contemporary times, Hundi has collected countless labels; the international press has spurned innumerable villainous descriptions, the bulk of which have helped to perpetuate a dense fog of notoriety. The critical problem lies in definition. As there is an incomplete understanding of hundi's form and remit, there is also a rather limited understanding of why the system persists, set against the backdrop of modern banking. In many ways the problem of definition presented legal and financial authorities of the early and late twentieth century with core issues which remain unresolved and problematic for authorities in the twenty-first century. By drawing on archival and other historical material pertaining to the system's usage amongst Indian merchants, this paper attempts to tackle much of the confusion and many misconceptions surrounding hundi. The discussion explores the idea that hundi is more accurately described as an indigenous banking system endowed with a complex range of functions, but whose central purpose is trade.

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Roger Ballard . “Coalitions of Reciprocity and the Maintenance of Financial Integrity Within Informal Value Transmission Systems: The Operational Dynamics of Contemporary Hawala Networks.” Journal of Banking Regulation 6 (4) (2005): 319352.

Mohammed El Qorchi , Samuel M. Maimbo , and John F. Wilson . Informal Funds Transfer Systems: An Analysis of the Informal Hawala System. Washington, D.C.: IMF/World Bank, 2003.

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Modern Asian Studies
  • ISSN: 0026-749X
  • EISSN: 1469-8099
  • URL: /core/journals/modern-asian-studies
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