Hundi: An Informal Remittance Transfer System in Asia

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THE SOCIAL ORGANIZATION OF HUNDI

Md Mizanur Rahman; Brenda S. A. Yeoh Online Publication Date: 01 March 2008 To cite this Article: Rahman, Md Mizanur and Yeoh, Brenda S. A. (2008) 'THE SOCIAL ORGANIZATION OF HUNDI', Asian Population Studies, 4:1, 5 - 29 To link to this article: DOI: 10.1080/17441730801963490 URL: http://dx.doi.org/10.1080/17441730801963490
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THE SOCIAL ORGANIZATION OF HUNDI Channelling migrant remittances from East and South-east Asia to Bangladesh
Md Mizanur Rahman and Brenda S. A. Yeoh
The informal funds transfer system found among South Asian migrant workers in general and Bangladeshi migrant workers in particular in the major labour-receiving countries of East and South-east Asia is popularly known as hundi. The hundi is informal but highly organized and founded on social infrastructure comprised of social and symbolic ties. Existing literature tends to highlight formal remittance channels and is underwritten by either economic or security concerns. Focusing on the social dimensions of the hundi as an informal funds transfer system and the recent security implications of the hundi system, this study examines the operations of and social relationships embedded within the hundi system in the context of East and South-east Asia. Drawing on the experiences of a Bangladeshi sending village as well as four destination countries in East and South-east Asia, this study reports that there are three phases in hundi transactions: the first mile, the intermediary stage and the last mile. The hundi is adopted and transformed through reciprocity. The system is composed of a web of interconnecting social relationships that supports the transfer of migrants savings internationally. We find reliability and credibility as essential ingredients to a hundi business and these are maintained through social sanctions. The study suggests that migrant workers right to use a cheap and convenient service should be facilitated. KEYWORDS: hundi; remittances; informal channel; East and South-east Asia; Bangladesh; migrant workers; transnationalism; labour migration; foreign workers
Introduction
The transfers in cash (or kind) from migrants to their non-migrating families in the source countries are usually referred to as migrant remittances.1 Migrant remittances are currently second only to foreign direct investment and are significantly larger than official development assistance in a number of developing countries (Ratha 2003). Between 2001 and 2005 international migrant remittances flows increased by 58 per cent, to reach about US$ 232 billion (World Bank 2006, p. 88). With about US$ 167 billion, developing countries received the biggest share, while industrialised countries in North America and Western European countries are the major sources (World Bank 2006, p. xiii). The true value of remittances, however, is likely to be much higher because this official account does not capture informal remittances (Abella 1989). One source estimates informal remittances as between US$ 100 and US$ 200 billion a year (Sander 2003, p. 4) while another puts the figure between US$ 200 and US$ 300 billion a year (Migrant Remittances 2004, p. 1). The Asian Population Studies, Vol. 4, No. 1, March 2008
ISSN 1744-1730 print/1744-1749 online/08/010005-25 2008 Taylor & Francis DOI: 10.1080/17441730801963490
MD MIZANUR RAHMAN AND BRENDA S. A. YEOH
flow of this huge amount of remittances demands a systematic inquiry into the channels through which remittance is transferred across international borders. Broadly, we can identify two types of funds transfer channels: formal and informal. Within formal channels, the institutions involved in money transfers are supervised by government agencies and laws that determine their creation, characteristics, operations and closure (APEC 2003, p. 3). Formal systems include banks and postal services, money transfer operators (MTOs) and other wire transfer services, and credit unions. The formal system is often criticized for high transaction costs and exchange loss. For example, the World Bank estimates that the average cost of transferring remittances in a formal system is about 13 per cent and sometimes exceeds 20 per cent of the amount remitted (Maimbo et al. 2005, p. 5). However, an informal funds transfer channel exists and operates outside of (or parallel to) conventional regulated banking and financial channels (Buencamino & Gorbunov 2002, p. 1). Informal funds transfer systems have long been in existence (Udovitch 1970; McPherson 1993). Initially used as part of trade and commerce, they were also drawn upon by early migrants to transfer savings (Aggarwal 1966; Wu 1967; Hicks 1993; Sandhu & Mani 1993). Presently, informal systems exist in different countries in different names and forms, for example, hawala (India, Pakistan and the Middle East), hundi (Pakistan and Bangladesh), fei-chien (China and South-east Asia), chit (China), chop (China), hui kuan (Hong Kong), padala and paabot (the Philippines), phei kwan (Thailand), chuyen tien tay ba (Vietnam), kyeyo money (Uganda), and mali a mbeleko (Zambia) (see Passas 1999; Bezard 2002; APEC 2003; Mellyn 2003; Maimbo & Passas 2004). The kind of informal funds transfer system found among South Asian migrant workers in general and Bangladeshi migrant workers in particular in the major host countries of East and South-east Asia is popularly known as hundi. The hundi is informal but highly organized and founded on social infrastructures comprising webs of relationships based on kinship, friendship, and regional networks. In the existing literature, the term hundi is used in relation to the hawala system found in the Middle East and South Asia (Passas 1999; Lambert 2002; Thieme 2003; Ballard 2005). However, the operations and characteristics of the hundi as found in East and South-east Asia are different in many respects from those of the hawala or other forms of informal funds transfer methods found globally. Some variations of hundi operations among countries in East and South-east Asia are visible and they are mostly attributed to macro-factors such as immigration policy, financial regulations, geographical proximity and clustering of migrant workers across national territory of the concerned countries. We can broadly identify two key players in the hundi system: hundiwala and hundi dealer. Hundiwalas are usually migrant entrepreneurs, who possess certain entrepreneurial qualities and specific social ties that provide the basis to seek access to the migrants and their families at home and abroad. They are physically involved in the collection of cash from migrant workers overseas, and in the carrying and distribution of cash to the migrants families back home. In contrast to quasi-similar types of individuals such as the mulas who tend to be only carriers of funds and American goods to Cuba in the case of US-Cuba remittance systems (Orozco 2002a), the services that hundiwalas offer are much wider and go beyond the economic transaction of funds. Hundi dealers are big funds operators, who are usually situated at the node of regional financial activities such as Singapore and are involved in the transfer of large funds.
The hundi system possesses several distinct features that account for its widespread use in this region. It includes benefits such as cost-free transaction, door-to-door service, speedy delivery, cultural convenience, and social rewards for trustworthy participants. Hundi is considered as a means to reproduce social power and status in the village social structure. The hundiwalas often enjoy non-economic pay-offs in terms of gaining social status and power in the migrants communities of origin, over and above economic profits, resulting in the social bases of sustainability of the system. Reliability and credibility of the hundi are maintained through social sanctions. If these are compared and contrasted with the formal funds transfer systems in developing countries, which are often plagued by high transaction costs, long processing, exchange loss, and last but not least, overly bureaucratic procedures (see also APEC 2003; El Qorchi et al. 2003), it becomes evident why migrant workers prefer to use hundi system to remit their hard-earned earnings. The role of different socio-economic groups, such as businessmen, students, and medical tourists, is also important in the commercial viability of the system because they borrow funds from hundiwalas overseas for their own uses. However, the functioning of the hundi system has been severely affected by the recent securitization drive. Migrant remittances have been a subject of security concern especially after the 9/11 terrorist attack (Ratha & Kethar 2004; FATF 2003; Burbidge 2004; Howlett 2002). After 9/11, substantial literature has emerged on remittance-transfers2 (Orozco 2002a; Vadean 2007; Ballard 2004a; World Bank 2002). A survey of the current literature shows that the discussion has tended to focus on: (i) an elaboration of different remittance channels; (ii) the disadvantages of the different informal remittance mechanisms for national economies; (iii) linking informal transfers with drug dealing and terrorist financing; (iv) the securitization of remittances; and finally, (v) policy recommendations on how to increase funds transfer through formal channels, that is, how to bank the unbanked. Thus, the overall tone of the existing literature is characterized by economic and security concerns. While the existing literature advances our understanding of remittances from the economic perspective, research is needed in the area of the social dimensions of remittance-transfer. Apart from this, little is known about the problems associated with increasing securitization of remittances and the trade-off between such concerns and the convenience of informal channels of transfer. Focusing on the social dimensions of the hundi as an informal funds transfer system and the recent security implications on the hundi system, this study attempts to fill this gap. Broadly, this paper examines the operations of and social relationships embedded within the hundi system in the context of East and South-east Asia. The next section outlines the scope of the study and research methodology. This is followed by the analytical framework for this study based on migrant network theory, and a discussion on Bangladeshi labour migration to East and South-east Asia and the institutional framework for fund-transfers to Bangladesh. Subsequent sections give emphasis to the social infrastructure of the hundi system, and, by drawing on the experiences of a Bangladeshi village as well as four destination countries for Bangladeshi migrant workers, the paper explores the raison detre behind the popularity and resilience of the hundi system. In the conclusion, we raise the fraught question of whether there is any evidence for a relationship between undocumented migration and informal remittance channels.
Scope and Research Methodology

As funds transfer involves destination and source countries, this study undertakes a multi-sited research methodology linking both ends. Focusing on Bangladeshi migrant workers in East and South-east Asia, the research was conducted in Bangladesh as well as four destination countries*Japan, South Korea, Malaysia and Singapore*of significance in terms of the resultant remittance inflows through the hundi system. International labour migration in Bangladesh tends to originate mainly from rural areas.3 To understand the social bases of hundi, we therefore conducted fieldwork at a predominantly South-east Asian migration source village, Gurail in Tangail district, situated roughly 60 kilometres away from Dhaka, capital of Bangladesh. The migration history of this village dates back to the 1980s. In the late 1980s, some enterprising individuals migrated to Singapore and Malaysia for work and became pioneers of the development of network-based migration patterns in Gurail and nearby villages. Presently, around twothirds of families in Gurail have at least one member in East or South-east Asia and are mostly dependent on remittances for their livelihood. We focused on Gurails basic social units and the principles for forming and maintaining these groupings to illustrate the social basis of remittance transfers. This community approach provides insights into the complexities of the remittance process in Bangladesh. Fieldwork in host countries involved, in each country, focus group interviews with migrant workers as well as interviews with individual workers for information about their personal experiences which they could not reveal during the focus group interview. We also interviewed some primary and secondary hundiwalas in all four countries studied, as well as talked to the owners of ethnic stores as many of them are engaged not only in hundi collection but also in procurement of Bangladeshi goods through hundiwalas. This has provided us a better way to understand the differences regarding the factors that determine the relative preference for hundi over formal remittance channels and the observed variations in the situations and practices of hundi. The fieldwork was conducted over a period of three months from 2004 to 2005. The strength of this research lies in the attempt to document the hundi process as a whole by focusing on both home and host countries rather than by centering on either home or host country only. However, we would like to acknowledge the fact that the duration of fieldwork was limited by financial and time constraints, and that this precluded more in-depth fieldwork in certain respects.
Hundi and Migrant Networks

Migrant networks are usually defined as sets of interpersonal ties that connect migrants, former migrants and non-migrants in the origin and destination areas through ties of kinship, friendship and shared country origin (Massey & Espana 1987; Massey et al. 1993; Gurak & Caces 1992). Research have not only shown how migrants are linked to each other through social networks but demonstrated the importance of these networks as the social infrastructure that sustains the migratory process over time (Massey & Espana 1987; Boyd 1989; Faist 2000). Migrant networks serve many important functions for their members including conveying information, providing financial assistance, facilitating employment and accommodation, and giving support in various forms (Massey et al. 1993; Arango 2000; Choldin 1973). As migrant networks demonstrate feasibility, reduce the expected costs and risk and increase the expected benefits of migration, they have been
widely used to explain perpetuation of migration at the intermediary level. Apart from supporting the mobility of labour, migrant networks also facilitate the transfers of migrant remittances*a phenomenon that has been given far less scholarly attention. Migrants and hundiwalas are embedded in a social-relational context characterized by social ties, a continuing series of interpersonal transactions to which participants attach shared interests, obligations, understanding, memories and forecasts (Faist 1997, p. 199). The strength and content of social ties that bind thousands of Bangladeshi migrants with hundiwalas into a social and business web are crucially important for understanding the endogenous dynamics of hundi bonds. Scholars have identified three forms of relationships in migrant networks: obligations, reciprocity and solidarity (Faist 2000). They bind prospective remitters and network based remittance service providers in an exchange relationship. Obligations and reciprocity work in the hundi process because each successful hundi strengthens the bond between migrant worker and hundiwala and provides a condition for durable exchange relationship. Solidarity is based on interpersonal and imagined ties that mobilize migrants in favour of remitting through some particular individuals over others. Migrant networks constitute a valuable form of social capital that individual migrants often draw upon during their migratory life to obtain different types of network-based services (Massey & Espana 1987; Portes 1995). Hundi service can be one of them. Social capital serves to connect individuals to networks and collectives through affiliations (Faist 1997). Social capital thus has a dual role: it facilitates cooperation between individual actors in creating trust and it links individuals to social structures (Faist 1997, 2000). For the hundiwalas facilitating the delivery of funds, migrant networks enable a lucrative business. Hundiwalas benefit through monetary or social debts incurred during the process of remittance transfer. Continued participation in network relationships renews and maintains the bonds between migrants and hundiwalas. In hundi dealing, trust in the hundi system or hundi trust is vital for its sustenance, hence hundiwalas use social and symbolic ties to garner hundi trust. It is important to note that hundi trust does not exclusively derive from social and symbolic ties in the communities of origin; it may also stem from the relationships that may evolve in the course of migration and the common experience of life in the destination country. There are some similarities between hundi bonds and guanxi bonds. The Chinese word guanxi refers to the concept of drawing on connections in order to secure favours in personal relations. It contains implicit mutual obligations, assurances, and understanding and governs Chinese attitudes toward long-term social and business relationships (Yang 1994; Ying & Walker 2006; Yadong 2000; Willard 1997). Hundi bonds also rely on similar forms of mutual trustworthiness. We identify two interlocking components in hundi bonds. The first component is the right of each person to request performance implicit in the bond. The second component is the obligation to repay. The failure to reciprocate favours results in the loss of ones network and the multiple resources embedded in it. Migrant networks not only provide a fertile ground to develop trust-based services; they also compel members to uphold the trust through social sanction mechanisms. This is because migrant networks link migrants and network-based service providers to their origin values and norms, the same social sanctions that discourage breaching trusts and commitments in network-based transactions. Emphasizing the role of migrant networks does not mean neglecting the role that business networks play in the remittance process. Business networks in remittance services
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work in collaboration with migrant networks. While migrant networks may usually be involved in the collection and distribution of funds, business networks make use of funds efficiently for profit within a given short span of time and therefore contribute to the commercial viability of the system. Table 1 presents some general features of the hundi.
TABLE 1 General features of Hundi.
Terms Descriptions Administrative charge-free service, no foreign exchange manipulation, door-to-door service, speedy service, and cultural convenience. Hundiwala and Hundi dealer Primary and secondary hundiwalas: primary hundiwalas are defined as persons who often move between host and home countries to deliver cash. Secondary hundiwalas are defined as persons who stay in the country concerned. Both hundiwalas take the responsibility of distribution of cash safely to the migrant families. Based usually in regional financial hub, Singapore, and engaged in the dealing of large amount of cash for profits. They do not take responsibility of distribution of cash to migrant families. They only take the responsibility of safe transfer of cash to the home country. Sending-end hundi trust and destination-end hundi trust. In sending-end hundi trust, migrant workers pay cash to the hundiwalas based on prior home-based relationships (social and symbolic ties). In destination-end hundi trust, migrant workers pay cash to the hundiwalas based on relationships developed in the course of migration in destination end. Sending-end based social control mechanisms like traditional authority; destination-end based social control mechanisms like fear of refusing the services of hundiwalas by migrant communities. Sometimes, both sending-end and destination-end social pressures are used to restore the hundi trust. It is the hundiwalas primary and secondary who are involved in the collection of cash from migrant workers. Primary hundiwalas collect directly from migrant workers and sometimes take help of secondary hundiwalas to collect money as found in Malaysia, South Korea and Japan. Primary hundiwalas sometimes pay a portion of the cash to the hundi dealers with profits and safe transfers to home country. Secondary hundiwalas sometimes also pay cash to hundi dealers for profit and safe transfer to home country. Trade, uses by socio-economic groups (e.g. students, medical tourists), transfers to third country because of the strict financial regulation in Bangladesh, and luggage business.a Primary hundiwalas visit migrant families to deliver cash on a regular basis. In the case of hundi dealers, migrant families visit the hundi dealers agents based mainly in Dhaka. Sometimes, primary hundiwalas collect money from the hundi dealers agents in Dhaka and visit the migrant families to pass them the cash. Secondary hundiwalas who transfer cash directly from the help of hundi dealers, employ agents in Bangladesh to collect cash from the hundi dealers agent based mainly in Dhaka and then distribute cash to the migrant families back home. Economic and non-economic pay offs
Hundi characteristics
Key hundi players Hundiwalas
Hundi dealers
Hundi trust
Restoration of trust
Collection
Uses of hundi money
Distribution
Hundiwalas profits
a
In the luggage business, individuals fly to another country to buy goods and return home with those goods in their luggage to sell in the local market. Such businessmen can make a profit by evading tax and choosing high value goods that can be sold at high profits in the home country.
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Figure 1 presents a prototype hundi transaction found in East and South-east Asia and is elaborated further in a later section. Figure 1 is broadly divided into three phases: first mile, intermediary stage and last mile. We have borrowed the terms first mile, intermediary stage, last mile from Hernandez-Coss (2005), who used the terms to explain the Canada-Vietnam and the US-Mexico remittances corridor sponsored by the World Bank. The first mile of the remittance process includes collection of remittance funds in the host country, the intermediary stage indicates uses and transfer of funds, and the last mile indicates distribution of funds in the home country. We have suggested that hundi is not a unidirectional medium of funds transfer as found in the context of other informal remittance channels, but bidirectional in which funds and goods are transferred from first mile to the last mile and commercial goods for sale and gifts for migrant workers overseas are carried from the last mile to the first mile.
Migrant Workers in Host Countries: Singapore, Malaysia, South Korea and Japan
First Mil e Intermediary Stage: Uses of funds
Last Mile
Hundiwalas fly with gifts / goods
Secondary Hundiwala
Hundiwalas: Collection Point in Host Country

Hundiwalas fly with cash / gifts
Transfer of Funds to Businessmen: Business underinvoicing
Transfer of Funds to Hundi Dealers: Singapore is the Regional Hundi Hub
Hundiwalas or Hundi dealers Distribution Point in Home Country

Cash
Hundiwalas deliver cash and/or gifts
Cash
Migrant Families in Bangladesh
FIGURE 1 Hundi operation: channelling remittances from East and South-east Asia to Bangladesh.
Hundiwalas receive gifts
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Figure 1 presents two types of hundi players in the region*hundiwalas and hundi dealers. Hundiwalas play a pivotal role in micro-hundi dealing and hundi dealers in macrohundi dealing. Hundi dealers are fundamentally users and transferers of cash. Some enterprising migrant workers as well as hundiwalas act as facilitators and collaborators in the collection of cash for hundi dealers. In macro-hundi dealings, a client in country X hands over a sum of money to the hundi dealer and requests that the equivalent amount be sent to a designated recipient in country Y. The sending hundi dealer relays all the necessary information concerning the transaction to a counterpart hundi dealer in country Y. The hundi dealer in country Y will give the money to the recipient upon presentation of some sort of identification (resembling Hawala, see Monsutti 2005; El-Qorochi et al. 2003). In this transaction, money is transferred between two parties living in two different countries but neither hundi dealers nor cash necessarily cross borders.
Labour Emigration and Remittance Flows in Bangladesh

Experiencing a huge surplus of labour and economic stagnation immediately after its independence in 1971, Bangladesh has pursued an active policy to facilitate international labour migration for its nationals. The country has entered in the labour markets of oil-rich Middle Eastern countries as early as the mid-1970s. Soon after occupying the Middle East market, Bangladesh targeted the comparatively developed economies of East and South-east Asia.4 By early 1990s, thousands of Bangladeshis started to migrate for work to the countries of East and South-east Asia, for example, South Korea, Malaysia and Singapore. In addition to the governments initiatives, Bangladeshis also joined in the labour market of these countries through personal initiatives. In the last decade, around 200,000 Bangladeshis migrated annually through the official channel (see Lian & Rahman 2006). According to available data, the total cumulative figure for Bangladeshi documented migrants overseas until 2007 was approximately 4.5 million, and for East and South-east Asia alone, it was roughly half a million.5 Japan is not a formal recipient of unskilled migrant workers. However, given loopholes in legal mechanisms, since 1980 many enterprising Bangladeshis have entered Japan by using tourist, student, business or transit visas and later overstayed to work indefinitely. Some Japanese sources revealed that between 1990 and 1998, there were 63,170 Bangladeshi over-stayers (Watanabe 1998, p. 246). Recorded remittances between 1991 and 2005 amounted to US$ 414.09 million (Table 2). Bangladeshis started to migrate to South Korea in the early 1990s under the trainee programme called Foreigners Industrial Training Programme (FITP). According to a Bangladeshi source, Bureau of Manpower Employment and Training (BMET), only 11,165 trainees between 1994 and 2004 went to South Korea for work. However, the Organization for Economic Cooperation and Development (OECD) report (2000, p. 211) revealed that the cumulative figure for Bangladeshi over-stayers in South Korea between 1992 and 2000 was 69,600. This inconsistency in data is mainly due to the clandestine nature of migration. The recorded remittance from South Korea was only US$ 2.27 million from 1991 to 2005 (Table 2). Formal recruitment of Bangladeshi migrant workers in Malaysia started in the early 1990s. According to one source, between 1992 and 1998, 307,000 Bangladeshi migrant workers were issued work permits to work in Malaysia (Athukorala & Manning 1999, p. 177). The amount of recorded remittances between 1991 and 2005 was US$545.31 million (Table 2). Similarly, large scale migration of Bangladeshi migrants to Singapore also started
TABLE 2 Country-wise and year-wise remittances earned in million US$.

Year 1993 30.41 4.78 2.42 1994 32.76 27.45 2.32 1995 27.69 71.56 3.78 1996 24.7 72.70 5.10 1997 0.98 22.47 66.45 1998 29.98 71.28 12.16 1999 45.16 57.22 11.28 2000 16.09 45.56 10.53 2001 11.60 31.85 8.15 2002 15.13 49.14 25.26 1.26 2003 18.78 33.51 28.92 1.01 2004 19.18 35.38 35.34 2005 10.76 22.41 55.98 4.80 Total US$ 414.85 545.31 307.42 2.27
Country Japan Malaysia Singapore South Koreaa
1991 81.90 1.90
1992 49.73 37.83
Source: Compiled from official data, Bureau of Manpower Employment and Training (BMET) http://www.bmet.org.bd/Reports/countrywiseremittance.htm (accessed 7 May 2007). a Remittance inflow from 1991 to 2001 is not available on official record.
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in the early 1990s. There are approximately 50,000 Bangladeshi migrants in Singapore in any given year since the mid-1990s (Rahman & Lian 2005). The amount of recorded remittances between 1991 and 2005 was around US$ 307 million (Table 2). According to official data, Bangladesh received around US$ 40 billion from its nationals overseas as remittances between 1976 and 2006.6 Formal funds transfer systems in Bangladesh include banks, MTOs and postal services. Bangladesh Bank,7 as the central bank of the country, permits other banks to establish drawing arrangements with foreign banks and exchange houses for facilitating remittance flows from Bangladeshi nationals living abroad (de Bruyn & Kuddus 2005, p. 30; Siddiqui & Abrar 2003; Ullah & Panday 2007). Bangladeshi banks began their operations in East and South-east Asia in the 1990s. Some banks that have arrangements with foreign banks and exchange houses in East and South-east Asia are Sonali Bank, Janata Bank, National Bank, Agrani Bank, Islami Bank and United Commercial Bank. Transfers of money from these countries usually take from weeks to months. Some migrant workers are found unhappy with long delays, corruption and unfriendly attitude of Bangladeshi bank officials in these countries (see also The Daily Ajkerkagoj 4 May 2005). Another important player in formal funds transfer systems is MTOs. They provide speed service but charge higher fees. Western Union and MoneyGram are examples of two major MTOs. Migrants can transfer money to more than 225,000 Western Union Agents located in over 195 countries and territories worldwide.8 MoneyGram is operating in 170 countries worldwide and have 75,000 local agents. The MTOs presently cover major district cities in Bangladesh. Another potential method of funds transfer is postal services. However, it is not popular among Bangladeshi migrants overseas. The data on informal remittances are sketchy. Mahmud (1989) reports that informal remittances account for 20 per cent of the total amount of remittances in Bangladesh (cited in Puri & Ritzema 1999, p. 8). Siddiqui and Abrars (2001) study on labour migrants to the United Arab Emirates revealed that 40 per cent of remittances were channelled through informal means (cited in de Bruyn & Kuddus 2005, p. 29). An International Labour Office (ILO) study on remittances in Bangladesh revealed that 10 out of 100 remittancereceiving families faced problems with the hundi, whereas nearly twice the number (19 people) encountered problems with official transfer methods (van Doorn 2002/4, p. 50). Ullah and Panday (2007) recently conducted a survey on Bangladeshi migrant workers in Malaysia and Hong Kong (n 0126) and found that only seven per cent of migrants from Hong Kong and some six per cent of migrants from Malaysia sent remittances through formal channels. According to a recent Asian Development Bank (ADB) report, 70 per cent of total remittances from Singapore to India, Bangladesh, and Sri Lanka go through informal channels commonly known as hawala and hundi (ADB 2006, p. 43). It is thus obvious that a large amount of remittances enters the country informally. Among the informal funds transfer systems, the hundi is a popular vehicle of funds transfer among Bangladeshi migrants. Some other traditional informal systems that are used include handdelivery and hand carriage.
Case Study in Home Country Hundi in Gurail: Role of Social and Symbolic Ties
The multi-layered relations that exist between hundiwalas and migrants and their non-migrating family members are of paramount importance in forming the social basis of
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hundi. The relationships are complex, and understanding them requires an elaboration of some of the basic spatial and social groupings in Gurail and the principles for forming and maintaining these groupings. Our aim here is to explain the bases of cooperation and mobilization of resources in a situation of migration and remittances in rural Bangladesh. Gurails major social groups include the family (paribar), gusthi (lineage), and samaj (community). These parallel the physical divisions of ghar (home), bari (collection of families), and para (hamlet or locality) (see Bertocci 1972; Rozario 1992; Wood 1994; Kuhn 1999; Gardner 1995). The most basic grouping is the family. The family is usually defined as a group that shares property and eats together from the same hearth (Rozario 1992). The second important social group is the bari, which usually stands for a group of families sharing the same courtyard. In general, baris are components of a larger group such as the gusthi or para. The term gusthi refers to the group of kin who trace their descent from one male ancestor. Para is a spatial grouping that means neighbourhood. Individuals are usually known to the outside para as members of particular bari. Generally, the name of the lineage is the name of the bari. However, sometimes names of the bari change with the outstanding achievements of bari members. For instance, some of the baris in this village and neighbouring villages are popularly known as the Singapore bari, Malaysia bari, and Korean bari. This means that someone from these baris must have migrated to the countries concerned. Thus, international migration functions as a source of new identity for oneself and ones family and bari. Outside of kinship ties, esthanio9 and attiyo10 are particularly important (Rahman 2004). People in their day-to-day life use these terms to indicate the relationship and responsibility that goes with it. The term esthanio implies common origin or being from the same place and an esthanio is someone from the same community of origin. In the migration literature, we find similar group paisanaje in the context of Mexico (Massey & Espana 1987). The term attiyo indicates the broader kin relationships. The closest bonds outside the family, attiyos and esthanios are friendship between people of roughly the same age. Although initially concentrated among persons of the same age, friendships gradually became inter-generational, as migrants of all ages are drawn together by the common experience of life overseas. Important friendships are formed with fellow migrants beyond the esthanio category, embracing people from other administrative units like the district, through the shared experiences of working overseas. In this way, interpersonal relationships within the migrant networks are extended beyond those possible through kinship, local friendship and esthanio alone. The bonds of these social ties do not lose their importance; in fact, they are augmented by new relationships. In contrast to social ties, symbolic ties can be mobilized even in the absence of earlier direct contact. Symbolic ties are perceived bonds forged by face-to-face interaction, or even indirectly, to which participants attach shared meanings, memories, future expectations and representations (Faist 2000). Among the migrants in East and Southeast Asia, it is found that they usually form symbolic ties based on the district of origin which often overlaps with social ties formed during the course of international migration.
Formation of Hundi Networks

To understand how migration and the subsequent hundi system developed in a remote village like Gurail, we need to focus on the history of migration in Gurail.
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Emigration from Gurail changed from a trickle to a flood after a few men migrated to South-east Asia as early as 1988 (Rahman 2004). The first few migrants returned and on subsequent trips initiated others into the migration process. Every new migrant created a new connection to the region. As more people migrated, the number of connections rapidly expanded and the quality of the ties also improved as people had already learned to adjust to life overseas. In-depth interviews with 12 early migrant workers in 2001 revealed that they assisted 101 migrants by providing both financial support and information and another 182 migrants by providing either financial support or information in their total working period in Singapore (Rahman 2004). Thus, all that is necessary for a migrant network to develop is for one forerunner migrant to be in the right place at the right time and to hold a position that allows him to distribute favours to others from his community of origin. One of the early migrants from Gurail was Asor Mia, who first worked as a construction worker and later as a middleman for recruitment and occasional hundiwala. Asor Mia is believed to be the first person who introduced the hundi to the villagers in the early 1990s as migration for work generated foreign earnings that needed to be carried back home. In the late 1990s, there were few hundiwalas who served Gurail and other nearby villages as primary hundiwalas. In our case study in 2005, we found two primary hundiwalas, who were serving Gurail and neighbouring villages by carrying remittances from Malaysia, Singapore and South Korea on a regular basis. In addition to these primary hundiwalas, we also found some secondary hundiwalas who were working for some other primary hundiwalas based in nearby towns, Mirzapur and Tangail. As we have mentioned earlier, hundi trust also stems from the relationships that may evolve in the course of migration in the destination country. In the case of destination-end hundi trust, these secondary hundiwalas are simply couriers*who carry cash and/or goods from primary hundiwalas to migrant families and vice-versa.
Operation of Hundi
Both hundiwalas identified here were early migrants in the locality. One of the hundiwalas had 15 years of migration experience in Asia comprising the Middle East and South-east Asia while the other had 14 years mainly in South-east Asia. The period of their involvement in hundi ranged from 9 to 11 years. However, this does not mean that they were primary hundiwalas for the whole period. At first, they were involved in hundi as secondary hundiwalas in the destination country. Over time, they have been linked to migrants overseas and the migrants families back home in several ways. Some migrant families know them both as facilitators of migration and as hundiwala. Others who did not seek help in the process of migration but asked assistance in the remittance process know them more as hundiwalas. One of the most important characteristics of these relationships is reciprocal obligations which include the exchange of personal favours. Hundiwalas maintain reciprocal relations with migrant families and vice-versa. Hundiwalas hand over the cash only to the family members that migrants suggest each time (e.g. parents, wives, siblings, etc.). This level of loyalty to migrant workers guarantees continuity and strengthens bonds between both parties. During their visits to family members, hundiwalas also convey first-hand information about the experiences and the physical condition of the migrants, which bears enormous meanings to loved ones at home. Hundiwalas sometimes offer advance payment to needy left-behind families. This
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generosity further binds both parties in reciprocal obligations. Every Bangladesh-bound journey for a hundiwala consists of gifts and news about non-migrating members that migrants overseas are waiting for and vice-versa. To migrant families and their members abroad, hundiwalas are a link between home and abroad. Each hundi transaction enhances reliability and credibility of particular hundiwala and ensures a respectable position in the village social hierarchy. However, breach of hundi trust produces shame and damages reputation for hundiwalas and their respective baris. Therefore, if any breach of hundi trust happens, heads of different social groups like bari, gusti and samaj sit together to resolve the unpleasant incident. Migrant families resort to community leaders for resolution but they normally do not have any evidence to prove their claims. Therefore, they see the legal system as almost incapable of producing positive results for them. In the community setting, the decision of the traditional leaders must be respected and followed by both parties. Commonly delivered decisions are: paying back the cash to the migrant families in a limited period and sometimes with interest, the failure of which means confiscation of the erring hundiwalas seasonal crops, landed property, and so on. However, where hundi trust is established in the destination country, social sanctions are different and the origin villages have little role to play.
Case Studies in Four Destination Countries
Japan
We find both hundiwala and hundi dealers in Japan. Hundiwalas, especially primary hundiwalas, are involved in the process of the collection of cash and are responsible for delivery of cash to the migrant families in Bangladesh. However, they are not usually carriers of cash, which makes them an exception compared to findings in the other three countries under investigation (South Korea, Malaysia and Singapore). Primary hundiwalas in Japan are usually among the earlier wave of migrants who have acquired residence permits or other types of legal status over time. We found dozens of South Asian ethnic stores in Tokyo and in other big cities of Japan, many owned by early Bangladeshi migrants. These ethnic stores usually sell South Asian products, especially halal food, catering to South Asian customers in general and the Muslim population in particular. They serve as the primary contact points for collection of cash from migrant workers. Hundiwalas use personal relations that have developed over time to contact the ethnic shop owners and make agreements with regard to the collection of cash. They often charge a fixed commission for their service ranging between 3 and 10 per cent. Prospective remitters pay the cash to the ethnic stores and leave a note of their details including the recipients name and address in Bangladesh. Hundiwalas later collect the cash and the relevant details from the shop-owners. As hundiwalas maintain contacts across the country and due to the impracticality of travel from one part of Japan to another, they usually request shop-owners to deposit the cash into their bank accounts and fax over recipients personal details. Primary hundiwalas contact the secondary hundiwalas who are usually new migrants (who possess valid documents) or luggage businessmen to send the cash to Bangladesh. These secondary hundiwalas travel weekly on the Bangladesh Biman which flies directly from Tokyo to Dhaka. On their outbound trips, they usually carry gadgets and other industrial products to sell in Bangladesh; on
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their inbound trips, they carry various Bangladeshi goods to be sold in the ethnic stores. However, as the airfare is expensive, regular visits do not produce substantial profits for both parties. In addition, the visa for Japan is usually offered for single entry only, further erecting barriers to frequent transnational boundary crossings. Primary hundiwalas, therefore, transfer the bulk of the cash to two main groups: regional hundi dealers and businessmen (importers from Bangladesh). The hundi dealers profit usually stems from two important sources: currency exchange rates manipulation and the use of cash in business dealings including transfers of funds to a third destination country (usually a developed country) and loans to Bangladeshi importers for the purpose of under-invoicing (Figure 2). Funds transfer is a profitable business for hundi dealers. Their clientele include business, political and military elites who wish to circumvent financial regulations in Bangladesh to transfer funds to a third country for personal savings. Financial regulatory mechanisms hence generate a demand for the external funds, creating a niche that hundi dealers can fill. In this situation, money very often moves in both directions: into the country and out on behalf of another economic agent who wants the foreign exchange (for details see Brown, 1994). Japan is one of the most important importing partners for Bangladesh. Amidst the large volume of business transactions between Japan and Bangladesh, migrant workers money plays an important role, especially in facilitating under-invoicing in the import trade. In an under-invoicing business deal, Bangladeshi businessmen make a deal with foreign companies to under-value imported goods in official papers. Once the deals are struck, they borrow the cash from hundiwalas or hundi dealers to pay the partner companies behind closed doors. In some cases, we find the practice of confirmation-
1. Businessman contacts company from importing country and makes deal regarding under-invoicing
2. Businessman collects cash from hundi dealer or hundiwalas and pays the promised cash to the company unofficially.
3. Businessman pays back the cash to the Last Mile agent and sometimes this payment takes place confirmation-beforepayment arrangement
FIGURE 2 Under-invoicing in business. Use of money at intermediary stage. Source: Adapted from McCusker (2005).
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before-payment where the recipients in Bangladesh receive the money from the hundiwalas first before the remitters in Japan make the payments. Businessmen who have already earned the trust of the hundiwalas do not need to pay the cash in advance. The motivation for under-invoicing stems from the profit that the businessmen can make by evading import duties in Bangladesh (Figure 2).
South Korea
The hundi system also exists as a dominant channel of remittances from South Korea. We identified both hundiwalas and hundi dealers in South Korea. In contrast to Japan, primary hundiwalas in South Korea are tourist visa holders who fly frequently to South Korea on hundi business. Many of them worked in South Korea as trainees before switching to the hundi business. Secondary hundiwalas are usually migrant workers* documented or undocumented*who have taken on remittance business as part-time work alongside their regular jobs. Secondary hundiwalas are found in different industrial sites or cities, where large congregations of Bangladeshi migrant workers can be found. They are also found at worksites where there might be fewer than 100 migrants to cater to. These are places where the bulk of unauthorized Bangladeshi migrant workers live in scattered camp-like situation. These workers often avoid public places and spend much of their time at the workplace. To meet the needs of these workers for remittance services, enterprising migrants sometimes take on remittance business as a part-time activity. Upon the collection of cash, they transfer the cash to primary hundiwalas with commissions ranging from 3 to 10 per cent. The rates of commission vary depending on the presence of pre-existing peer, regional or kinship ties. In South Korea, the use of cash at the intermediary stage resembles that of Japan. Primary hundiwalas basically use the cash in two areas: loans to Bangladeshi businessmen for under-invoicing and the transfer of cash to regional hundi dealers. In both cases, they make substantial profits. In addition, some primary hundiwalas carry cash with them during their outbound trip to Bangladesh. From South Korea, hundiwalas do not convert remittance money into kind because goods are expensive and do not generate substantial extra value. However, at the time of their inbound trip to Korea, they carry Bangladeshi goods to sell in the South Asian ethnic stores. As visa procedures are more liberal in South Korea and there is also provision for on-arrival visas for Bangladeshis, primary hundiwalas, who have never stayed beyond their visa allowance, can easily obtain a three-month long stay permit in South Korea. This has further encouraged the widespread use and development of the hundi system in South Korea.
Malaysia
The collection and use of migrant remittances in Japan and South Korea differ in many respects from those of Malaysia and Singapore. While hundi dealers play a pivotal role in the first two countries, we find that primary hundiwalas play the dominant role in Malaysia and Singapore because mainly of geographical proximity to Bangladesh and liberal visa policies in both countries. Primary hundiwalas in Malaysia are usually early migrants who are eligible for multiple entry visas and therefore can fly back and forth frequently. Secondary hundiwalas are either documented or undocumented migrant workers. The remittance business features as part-time work to augment their incomes.
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The geographical origins of Bangladeshi migrant workers in Malaysia are very diverse. There might be as many as twenty districts in Bangladesh from where a large number of migrants hail. This diversity has produced enormous numbers of hundiwalas, especially secondary hundiwalas because it is principally the secondary hundiwalas whom migrant workers trust primarily. The collection of remittances in Malaysia is similar to that in South Korea, reflecting the large number and widespread distribution of undocumented migrant workers in both countries. Upon the collection of cash, secondary hundiwalas transfer the cash to the designated bank accounts of primary hundiwalas and send them mobile phone text messages (via Short Message Service) informing them of the details of these transfers. Based on predetermined rates, they deduct their commissions from the collected cash at the time of the transfer. Primary hundiwalas fly with cash and goods to Bangladesh on weekdays and return to Malaysia with Bangladeshi goods to sell in ethnic stores on weekends. The second route to channel remittances is the same as that found in South Korea and Japan: transfers of cash to businessmen for under-invoicing and regional hundi dealers. However, the under-invoicing phenomenon is much less common in Malaysia where there is a general lack of coordination between hundiwalas and businessmen (importers). While the bulk of the cash is carried by hundiwalas themselves on their regular weekly trip, only a small portion of the cash is transferred to the regional hundi dealers for profits. Recently, however, a significant number of Bangladeshi students have been emerging as new users of cash. Every year, thousands of self-financing Bangladeshi students enroll in educational institutions in Malaysia and borrow cash from hundiwalas to meet their educational expenses. Hundiwalas also collect cash from their parents in Bangladesh at predetermined interest rates. The demand for such funds transfer exists because formal transfers of fund from Bangladesh to other countries involve lengthy bureaucratic procedures which many parents find not only inconvenient but also costly because of the foreign currency conversion rates and, at times, off-putting due to the unprofessional conduct of officers. Some migrants have married local Malay-Muslim women and integrated into the mainstream of Malaysian society. These are the individuals who have opened up shops and businesses to serve the South Asian migrants. Some hundiwalas receive financial and immigration support from these immigrant communities in the form of sponsorship for long-time Malaysian visas.
Singapore
In many ways, Singapore is a classic example of the hundi system in East and Southeast Asia. Until recently, the hundiwala was almost the sole operator of remittance transfers for Bangladeshi migrant workers in Singapore. Primary hundiwalas in Singapore are usually tourist visa holders who fly back and forth weekly. We find the role of secondary hundiwalas limited and, in some cases, trivial. Unlike secondary hundiwalas in South Korea, Japan and Malaysia, secondary hundiwalas in Singapore are more like collaborators who assist the primary hundiwalas in the collection but do not charge any commission for their services. Hundiwalas use kinship, friendship and regional/village networks to find these collaborators. The phenomenon of Sunday gatherings is very popular among migrant workers in Singapore. There might be around 25,000 to 35,000
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Bangladeshis who regularly congregate at Little India on Sunday afternoons for a myriad of purposes including the business of remitting money home. Migrant workers who intend to remit money home visit particular lanes, roadsides or shop premises in Little India on Sundays and meet their particular hundiwalas to whom they hand in the cash directly. This Sunday phenomenon, as well as Singapores small geographical size, has contributed to the dominance of primary hundiwalas in the direct collection of cash, in contradistinction to the other three countries. Primary hundiwalas visit Singapore usually on Fridays and collect the cash on Sundays. They do some shopping on Mondays and leave Singapore by Tuesday. It is important to note that electronics, cosmetics and gold ornaments from Singapore (not necessarily made in Singapore) bear high social and economic value in Bangladesh in general and many migrant-source districts in particular because the possession of such goods provides a context to claim higher social status in some source areas (Rahman 2004). The operation of the system is simple: collect cash from migrants; spend the cash to purchase different types of goods; return to home country with goods; sell them in the local markets for tidy profits and pay back the money to the migrant families. On the return journey, they carry goods to sell in Bangladeshi shops in Singapore. Over time, several dozens of Bangladeshi shops have come into being in Singapore to serve Bangladeshi migrant workers. In the case of Singapore, hundiwalas usually collect money from migrants of their geographic origin so that they can deliver the cash within the weekly circle. Some hundiwalas also transfer cash to hundi dealers in Singapore with commission. In addition, Singapore as a regional education and health-care hub has been able to attract a substantial number of Bangladeshi students and medical tourists annually. We also observed some use of migrant savings in education and medical tourism. Singapore as a global city is well-connected in the region and the rest of the world. The hundi business capitalises on its financial connectedness in the global economy. Singapore as a regional centre for business and financial activities follows a liberal policy for transfers of funds internationally, and this has accorded to Singapore the reputation of being a regional hundi hub. Singapore plays the central role in hundi dealing in East Asia, South-east Asia, Oceania and South Asia, paralleling the role of Dubai in hawala dealing in Middle East, Europe and South Asia. Some changes, however, have taken place in recent years. One of these is the imposition of visa restrictions on Bangladeshis after 9/11. Formal remittance players are presently taking advantage of these restrictions to establish a presence, as reflected in the sharp rise in total inflow of remittances from Singapore in the last three years in terms of the recorded remittances data (see Table 2). Although the hundi has emerged as a trusted system in East and South-east Asia, it is not free from the risk of betrayal. Migrants are generally aware that they have little recourse to the law in the case of fraud to recoup their money as they lack legal documents. While in the minority, we found that in all four countries studied, there were a few cases wherein hundiwalas did not pay back the cash to the recipients at all or cases wherein there were delays in delivering the cash to the families back home. As hundi trust at the destination end is often built on the relationships developed and expanded in the course of migration, the concerned migrant workers therefore get in touch with their primary contact points to recoup the cash. In general, other migrant workers in tandem with concerned migrants and hundiwalas usually organize meetings for an amicable solution and the decision that arises from such community meetings is usually maintained
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by the concerned hundiwalas. Otherwise, the hundiwalas who are responsible for betrayal will lose trust among the migrant community leading eventually to the termination of hundi enterprise. If hundi trust is built on the social and symbolic ties in the communities of origin, community leaders back home play the dominant role in the repayment of cash.
Features of Hundi: Home and Host Countries

We have shown three phases in hundi transactions, involving the first mile (host country), the intermediary stage and the last mile (home country). We have identified some differences in the collection of cash in the four countries studied. While hundiwalas in Japan use ethnic shops as a collection point, hundiwalas in the other three countries physically approach the prospective remitters to collect the cash. Primary hundiwalas are usually liable to the migrant workers and their families for the ultimate payment of cash. However, this is not the case in all four countries. In South Korea and Malaysia, the liability lies primarily with the secondary hundiwalas, who are in fact fellow migrant workers. This is because migrant workers are from diverse sources (districts of origin in Bangladesh); they are mainly irregular in status and enter the country in large numbers; and they are geographically scattered in different parts of the host country. As a result, many primary hundiwalas find it difficult to manage without sharing the liability with some intermediary group. This sharing of liability with secondary hundiwalas has made the hundi popular and accessible to all sections where migrant workers are, whether they are working legally or illegally, in cities or remote places, and in construction, the plantations or manufacturing. We have described how migrant workers money is used and re-used at the intermediary stage to make profit. The involvement of different interest groups*for instance, businessmen and regional hundi dealers*at the intermediary stage in fact has not hampered the transfer process; rather, it has made the process smoother and more profitable for the hundiwalas. The uses and re-uses of funds at the intermediary stage depend on the geo-political location of the host countries. We have found some similarities in the use and re-use of funds between Japan and South Korea in East Asia and between Malaysia and Singapore in South-east Asia. In East Asia, a sizeable amount of remittances is used for the purpose of import under-invoicing. However, in South-east Asia, hundiwalas play a much more important role in the transfer process. They spend remittances on goods for sale in home market while use of remittances for import underinvoicing is minimal. The South-east Asia scene has also given rise to the emergence of new users such as students and medical tourists as reported in the cases of Malaysia and Singapore. The role of hundi dealers, however, remains equally important in both regions. We have explained the bases of cooperation and mobilization of resources in a situation of migration and remittances in a migration source village, Gurail, Bangladesh. We have shown how hundi developed in a remote village. Migrant families and hundiwalas are found embedded in a social-relational context characterized by social and symbolic ties. Hundiwalas are found to have benefited through money or social debts incurred in the process of remittance transfers. We have shown that in the hundi system, one requires social capital and embeddedness in social relations. The hundi is thus founded on social infrastructure comprising social and symbolic ties, which is reinforced through reciprocity
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over time. The system is composed of a web of interconnecting social relationships that supports the transfer of migrants savings internationally. We have focused on reliability and credibility as essential ingredients to a hundi business, and these are maintained through social sanctions. Failure to maintain the principles of hundi leads to permanent damage of reputation at home and abroad and may even lead to eventual cessation of business. We have shown that the hundi possesses several characteristics. Two of the economic incentives that hundiwalas offer to migrant workers are exchange rates which are higher than those offered by formal institutions and zero-fee services. Hundiwalas also offer speedier service, door-to-door service, that is, hundiwalas collect the cash from the migrants by visiting their residences or gathering places in host countries and then deliver the cash to the migrants families in the home countries. It is a two-way service* hundiwalas carry not only cash, gifts and firsthand information from migrants overseas to their families in source communities, they also carry gifts, goods and firsthand information from the migrants families to the migrants in host countries. The hundi system is culturally compatible for both migrants and their families. In general, most of these migrant workers and their left-behind families have limited education and are usually unfamiliar with formal banking procedures and terminology, in addition to conservative family traditions in Bangladesh (especially certain bari traditions), which often encourage maintaining minimal contact with the outside world for their women folk. A trusted and acquainted hundiwala who is linked by strong ties is an acceptable intermediary in such circumstances.
Conclusion
This paper has attempted to advance understanding of the social organization of informal remittances using the example of the hundi system found among Bangladeshi migrants in East and South-east Asia. The paper reports that, despite the presence of formal remittance systems, the majority of migrants choose to send remittances through informal mechanisms, particularly the hundi system. We have suggested that hundi fundamentally relies on mutual trustworthiness and involves mutual obligations, assurances, and understanding. The strength and contents of social ties between migrant workers and hundiwalas are crucially important as the social basis of the hundi system. These ties are found in the traditional form of social relationships that bind hundiwalas and migrants and their families into a social and business web at home and abroad. Both the migrant and the hundiwala capitalize on social and symbolic ties in the course of migration: a migrant draws on these ties to transfer funds safely and cheaply while a hundiwala uses them to make material (economic) and non-material (social status) gains. From a hundiwalas perspective, involvement in the hundi is not only economically rewarding but also socially significant because it offers a venue to reposition oneself in the rural social hierarchy. We have reported that the relationship between the hundi system and unauthorized migration is complex with few easy answers. We cannot conclude that the hundi is merely a vehicle for funds transfer among unauthorized migrants. Although Singapore hosts a minimal number of unauthorized foreign workers, the use of the hundi is widespread. A survey of 126 Bangladeshi migrant workers in Singapore conducted in 2003 revealed that 95 per cent of migrant workers remitted money
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through the hundi system while the remaining five per cent remitted using formal channels (Rahman 2004). Despite the presence of a large number of unauthorized migrant workers in all the other three countries, we have found that a substantial amount of money was remitted through formal channels, especially in Japan and Malaysia (Table 2). If we compare Japan with South Korea, the complexity will further unfold. Japan lacks a legal framework to accommodate Bangladeshi migrants while South Korea hires them under legal arrangements. If we consider unauthorized status as the sole indicator for widespread use of the hundi, there should be higher proportions of formal remittance flows from South Korea compared to Japan, but this is not the case. These discrepancies can only be explained by a deeper understanding of the social infrastructure on which the hundi system is based and the value of the services that it provides to migrant workers and their families. The increasing securitization of remittances after the 9/11 terrorist attack has substantially affected the operation of hundi in the region. While there may be loopholes in the informal funds transfer system, the primary question that needs to be asked is who will gain and who will lose from the increasing securitization of remittances. Given the recent rise in the use of official channels, it is clear that formal institutions including banks and MTOs have benefited from the increasing formalization of remittances. From the migrant workers perspective, it is obvious that they are the losers from this increasing securitization process because they are not getting the best deal in funds transfers. Migrant workers often sacrifice their familys assets to be able to migrate and such risks often lead to long-term indebtedness as they are often not able to redeem their debts quickly. As migration is at the level of individual financial arrangements, migrant workers deserve the right to select the most economical and convenient channel of funds transfers. As the formal system does not provide a cheap and convenient service for these debtridden low-skilled migrant workers, their right to choose a better deal for every hardearned dollar should be facilitated.
ACKNOWLEDGEMENTS
The authors wish to thank Habibul Haque Khondker, Lian Kwen Fee, Jennifer Jarman, Shapan Adnan, Roger Ballard (CASAS, University of Manchester), C.R. Abrar (RMMRU, Bangladesh), Khurshed Alam (BISR, Bangladesh), and Binod Khadria (JNU, India) for their support. The authors also thank the anonymous reviewers of Asian Population Studies for their insightful comments on the draft version of this article. Financial support from the Asia Research Institute, National University of Singapore is noted with appreciation.
NOTES
1. 2. The term migrant remittances generally refers to transfers in cash or kind from migrants to resident households in the country of origin (Bilsborrow et al. 1997, p. 321). See Hernandez-Coss 2005; Puri & Ritzema 1999; APEC 2003; El Qorchi et al. 2003; Mellyn 2003; Seddon 2004; Monsutti 2005; Sharma 2006; Ballard 2004b. For details about relevant literature, please refer to our working paper (Rahman & Yeoh 2006). However, this does not mean that individuals from cities do not migrate to this region as unskilled workers. A small number of them do and also probably use hundi to transfer
3.
THE SOCIAL ORGANIZATION OF HUNDI their funds. Since the majority is of rural origin, we therefore look into the rural social infrastructure to explore the hundi operation. For details about Bangladeshi labour migration to East and South-east Asia, please refer to an earlier draft of this paper, Rahman and Yeoh (2006), available online at: http:// www.populationasia.org/Publications/RP/AMCRP20.pdf This cumulative gure comes from the BMET, the ofcial body responsible for keeping records of authorized migrant workers. However, it does not keep records for returning migrants. Available online at: http://www.bmet.org.bd/Reports/Flow_Migration.htm (accessed 7 May 2007). See http://www.bmet.org.bd/Reports/Flow_Migration.htm (accessed 7 May 2007). Information on different banks involved in remittance in Bangladesh and overseas is compiled from the Bangladesh Bank website: www.bangladesh-bank.org (accessed 9 November 2005). Information regarding Western Union and MoneyGram was compiled from their websites; see http://www.westernunion.com and http://www.moneygram.com (accessed 18 November 2005). Esthanio is a Bengali word which indicates belongingness to a particular geographic area which may be a village, union, or local administrative units like thana or districts, depending on the context. It involves certain responsibilities: execution of these responsibilities brings prestige for the person concerned while denial draws the condemnation of society. Attiyo bears enormous signicance in the Bangladeshi society. The word Attiyo means connected by heart. When a Bangladeshi mentions that he is my Attiyo, it means he is part of my heart. However, it depends on the context*villagers sometimes use it loosely and sometimes strongly. Attiyo covers blood relatives and relatives by marriage (for details see Bertocci 1972; Rozario 1992; Wood 1994).
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4.
5.
6. 7.
8.
9.
10.
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YADONG, L. YANG, M.
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Md Mizanur Rahman (author to whom correspondence should be addressed), Department of Sociology, National University of Singapore, Singapore 117570. Tel: 65-65167337; E-mail: mizan@nus.edu.sg; mizanur.rm@gmail.com Brenda S. A. Yeoh, Professor, Department of Geography, National University of Singapore, Singapore 117570. Tel: 65-65165281; E-mail: geoysa@nus.edu.sg

Hundi: An Informal Remittance Transfer System in Asia

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Asian Population Studies

THE SOCIAL ORGANIZATION OF HUNDI

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MD MIZANUR RAHMAN AND BRENDA S. A. YEOH

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MD MIZANUR RAHMAN AND BRENDA S. A. YEOH

Scope and Research Methodology

Hundi and Migrant Networks

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Uses of hundi money

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Hundiwalas: Collection Point in Host Country

Transfer of Funds to Businessmen: Business underinvoicing

Transfer of Funds to Hundi Dealers: Singapore is the Regional Hundi Hub

Hundiwalas or Hundi dealers Distribution Point in Home Country

Migrant Families in Bangladesh

Hundiwalas receive gifts

MD MIZANUR RAHMAN AND BRENDA S. A. YEOH

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Labour Emigration and Remittance Flows in Bangladesh

TABLE 2 Country-wise and year-wise remittances earned in million US$.

Country Japan Malaysia Singapore South Koreaa

1991 81.90 1.90

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1992 49.73 37.83

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THE SOCIAL ORGANIZATION OF HUNDI

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Formation of Hundi Networks

MD MIZANUR RAHMAN AND BRENDA S. A. YEOH

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THE SOCIAL ORGANIZATION OF HUNDI

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Case Studies in Four Destination Countries

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Features of Hundi: Home and Host Countries

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