Hundi System used to smuggle remittances worth up to $8 billion

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Under the leadership of Senator Saleem Mandviwalla, a meeting of the Senate Standing Committee on Finance and Revenue was convened today at Parliament House. The committee reviewed the widespread divergence of remittances into informal (undocumented) channels.

Members of the committee insisted that the governor of the State Bank of Pakistan (SBP), Jameel Ahmad, reveal the amount of foreign exchange traded in the Hawala/Hundi markets, but he refused and claimed that inflows from these markets are not included in the official records of remittances.

He said that using the route to send money was forbidden.

Salim Mandviwala, the committee’s chairman, informed the committee that it is estimated that the Hundi market contributes up to $8 billion annually to Pakistan. Members believed that if SBP tightened regulations to limit the flow of foreign money to authorized channels, the informal market would flourish.

The SBP governor defended the strict procedures and mentioned that $27 billion in remittances were recorded during the previous fiscal year.

All remittances are supposed to be received through the banking system, according to him. He added that Pakistan plans to join the cross-border payment system that connects the Arab nations.

Ahmad also mentioned that the inflation in Western nations caused a decline in remittance inflows to Pakistan in the previous fiscal year, but he expressed optimism that things will turn around soon.