KUWAIT CITY, Nov 16: Hawala business in Kuwait is feeling the heat with the availability of instant money transfer facility through legal channels, a hawala broker told the Arab Times on condition of anonymity. The source went on to add that hawala, which is also referred to as hundi, used to be lucrative business a few years ago and that hawala brokers are now devising new methods to jump start their sagging business. Hawala entails money transfer through a network of brokers even as a client approaches a hawala broker in his city and gives a sum of money which is to be transferred to another country.
The hawala broker then calls up his counterpart in the recipient’s city, thereby giving his client’s address and the money is delivered within minutes if the address is in a city, if not it could take one full day. Citing an example, he said the hundi traders have their fixed customers, to whom they offer a loan that is normally repaid upon getting one’s salary.
He observed that hawala brokers are charging almost two per cent less than the exchange rate even as some brokers are providing their services at the doorstep.
“A large number of the people sending money through hawala include: Indians, Bangladeshis and Pakistanis. Some people find it a very convenient medium because all they have to do is call up the hawala trader and ask him to send the amount to their families,” he added. Confirming that money laundering has taken a hit over the past few years, the Director and General Manager of Bahrain Exchange Company (BEC), E.D. Titus said that instant money transfer through legal channels is fast spreading among Asians and that this has affected the hawala business in a big way.
“Hawala is largely patronized by unskilled expats who live in remote areas and especially those who are not aware that money can be sent through legal channels. There is an imperative need to educate people on the benefits of sending money through the legal channels.” Titus noted that earlier people preferred to send their money through hawala channel because of lower rate but with money exchanges now offering better rate than hawala brokers, people prefer to send their money through legal channels.
An Indian, who declined to be identified, says that he has been sending money through the hawala medium because he believes it is hassle free. “I can send up to Rs 20,000 to my family in Rajasthan by just making a call. I pay the broker at the end of the month. Besides, the rate the trader is offering is lower than that of the Exchange rate and I am not required to pay any service charges. Some brokers are also giving gifts to customers who are remitting a large amount of money on a regular basis.”
T. Dilhara, a Sri Lankan, said that he has been sending money through hawala channel for the past five years and that he has found it reliable and efficient.
“All the dealing is done over the phone, thereby avoiding a lot of hassles such as standing in a queue besides avoiding the paperwork. I also pay the broker only after get my salary and this is beauty about the whole system. The rate offered by the hawala brokers is the same as that of the exchanges but what matters is that the hawala is less hassle free for me.” A Bangladeshi, Hassan Reza, said that he has been sending money to his family through hawala because he finds it efficient and reliable.
“I call up the broker and he will be in my office within minutes. So in a way, I don’t have to go to the exchange and I have been using the service for the past ten years and have never ever encountered any problem. So this has only bolstered my confidence in the system,” he noted.
By Francis A. Clifford Cardozo
Arab Times Staff