What exactly is hawala?

What exactly is hawala?

Hawala is used in India, Middle East and South Asia and it is an ancient system of transferring money. Hawala can be defined as a money transfer method, which takes place outside the traditional banking system and requires a minimum of two Hawala dealers (or hawaladars) that take care of the “transaction”.

Are hawala transactions legal?

Is hawala Legal in India? It is definitely not legal in India as it has been declared as an illegal way of transferring money by The Foreign Exchange Management Act, 1999. Prior to that, it was made illegal under The Foreign Exchange Regulation Act (FERA) Act, 1973.

What does the name hawala mean?

Hawala is an Arabic word which literally translates to “transfer”. It is also referred to as “hundi”. This is a system that does not necessarily be legally enforceable because it essentially depends on the concept of trust. The hawaladars hence, need not transact with the help of promissory notes.

How does the hawala mechanism work?

How hawala works In the most basic variant of the hawala system, money is transferred via a network of hawala brokers , or hawaladars. It is the transfer of money without actually moving it. In fact, a successful definition of the hawala system that is used is “money transfer without money movement”.

What is the meaning of hawala monetary transaction system?

Hawala is an informal money transfer system in which money is passed on through a network of brokers (who are known as hawaladars) without the actual/physical movement of cash. It is the transmission of money in ways other than the regular banking routes and hence sometimes called underground banking.

What does hawala mean?

Freebase(0.00 / 0 votes)Rate this definition: Hawala. Hawala, also known as hundi, is an informal value transfer system based on the performance and honour of a huge network of money brokers, which are primarily located in the Middle East, North Africa, the Horn of Africa, and the Indian subcontinent .