Majority of Overseas Pakistanis still using hundi for money transfers

ISLAMABAD: Pakistan Economy Watch (PEW) Thursday said the overwhelming majority of Pakistani expatriates were still using hundi to transfer funds home bypassing the legal banking systems.

The trend is depriving the country of legitimate taxes as well as foreign exchange and the government should try to tap potential of three million overseas Pakistanis by introducing sweeping reforms in the existing banking system.

So far various legal steps and administrative actions have not stopped or significantly dented the parallel remittance system.

“Flow rate through illegal money transfers is in billions of dollars while a small part comes through lawful means,” said Dr Murtaza Mughal, President of Pakistan Economy Watch, in an exclusive talk with APP, while releasing the PEW report titled, “Centuries old hundi system versus modern banking.”

He said the reason behind thriving hundi or hawala business is inefficiency, exorbitant charges and delayed deliveries by banking services.

“The system of hawaladars is faster then any bank; it guarantees anonymity and would never involve paper work like identification and account opening,” he said.

The unproblematic structure of this business suits best for a country where undocumented economy is believed to be almost equal to the documented one, he added.

“Apart from reliability, speed and cost effectiveness, it dodges the exchange and tax regulations which is very attractive for people,” he said and added that the hundi system is unaffected by international and regional scrutiny, political, economic or any other factor including global resolve to curb it at any cost.

Foreign Terrorist Asset Tracking Centre of the USA, Organization for Economic Cooperation and Development having 30 countries as members and other international institutions have yet to prove their effectiveness. Many countries including Pakistan have frozen many accounts but experts believe that it was only a fraction of the whole system. “It has a very negligible impact,” he said.

They hundi people are now armed with latest technology, would conveniently transfer funds anywhere; even between two enemy states, he added.

Worldwide anti-money laundering steps backed by US have injected new blood into this business in which some five thousand people are believed to be involved in Pakistan only. Involvement of some bankers and influentials has also boosted the hundi business, the report said.

A person who uses hundi pays nominal commission while the one who opts for the legal channel gets the currency converted at government exchange rates, which are always lower than market rates. One may loose Rs 4 to Rs 6 on every dollar sent through banking channel. This issue must be addressed on priority, the report suggested.

“This network is hard to crack and it will flourish until government take steps to make legal transfer of funds efficient by reducing red tapes, making it competitive, cost effective and accessible,” the report added. app

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  1. Pakistani Banks: I am Tauqeer Ahmed and my accts is HBL. dear brothers & sisters I just want to share attitude of people from Banking sector. It is not just by accident; bcz the incident has took place for about seven times. My brothers are in abroad for last many yrs. They send money to me my mother who is quiet old on monthly and also on other occasion. For complaining the attitude of banking staff me and my other requested them to use some other mean. Eventually, they started sending amount either by Western Union r money gram. U will be astonished there are at least 7 occasion when I approached some Bank (which also offer service of money gram) for collection of amount, they after looking the amount simply told lie that code is either invalid or link is down or other party is not validating. On the other hand while sitting in the same banks once I made a call to private money exchanger they confirmed the amount. Last incident took place yesterday. I first went to Bank Al-Habib (scheme 3 Branch) Rawalpindi, he said code is in valid, than I asked him is there any other Br he negated. But once I came out I saw a br of Bank Al- Islami , again they said code is not acceptable. Eventually I came back home contacted my Brother and confirmed the code . Next day (Friday) I went to Sonehari Bank (Soan Garden Br) Islamabad; staff dealing with money gram was ot present in his seat after my number of requests , a member took my ID card copy asked for the code and went to Manager office in a minute or two he came back and told me that link is down. I asked him why it is always link of u people which is down, I have never seen money changer link down but he had no answer. Later he gave me his number and told to check for link after Jummah prayer, but link was never up as usual til 6 o clock. Consequently I called one of money changer I saddar Rawalpindi and shared the code and he confirmed me the amount just in 10 seconds. The issue I want to communicate is it is not one bank but complete sector, they use our money, misbehave to us, always give us loan on hi interest with lot of hidden charges , always tell a lie (not one thing , but all thing all the times) and betray the innocent public. To me the only remedy to this is to keep out ur money away from their reach, invest it in some Halal business so that at least we get rid of this ” Soodi Nizam” . Mau Allah bless us give us wisdom to choose the right path

    • You are right brother, all banks in Pakistan are POS, they collect deposits from us and give loans to only rich elites of this country while we only get bad service.