Hundis were used as remittance instruments (to transfer funds from one place to another); as credit instruments

(to borrow money; and for trade transactions (as bills of exchange). Technically, a hundi is an unconditional order
in writing made by a person directing another to pay a certain sum of money to a person named in the order.

Why it’s Illegal ?

 It acts as a great source for hiding & cashing out black money into white money.
 No questioning & no limits to the amount of cash,being transferred, with its purpose being a mystery.
 High chances of money being used to fund terror organizations, bribing officials, illicit money, drug
money, trafficking money etc.

Why people still use Hawala/Hundi?

Inspite of the fact that hawala transactions are illegal, people use this method because of the following reasons:

1. The commission rates for transferring money through hawala are quite low.
2. No requirement of any id proof and disclosure of source of income is there.
3. It has emerged as a reliable and efficient system of remittance.
4. As there is no physical movement of cash, hawala operators provide better exchange rates as compared
to the official exchange rates.
5. It is a simple and hassle free process when compared to the extensive documentation being done by the
banks.
6. It is the only way to transfer unaccounted income.
7. A major plus point of the hundi/hawala system is that instead of the recipient coming to collect the cash,
a representative of the network delivers at the recipient's doorstep. This is a great facility, especially for
women recipients.

It is rightly argued that hundi/hawala money transfer has become a major impediment in improving the country's
forex reserves, due to only the limited transfer of funds by overseas Bangladeshi through legal channels. The hundi
system allows its operators, based in foreign countries, to keep the hard currency, and transfer the amount to the
recipient in Bangladesh in the local currency. This has blocked a major part of the remittances from reaching the
country.

The risk of hundi is that the money can easily go to the wrong hands for terrorism and other subversive activities.

Unless and until the legal banking system is suitably simplified, people will continue to prefer the hundi system to
legal banking channels. The formal banking system should also provide the doorstep service as Hindi through
mobile banking.
Loan Syndication
In simple words, loan syndication is financing a single borrower by a group of lenders (called a 'Syndicate')
who work together to provide the required fund. Loan syndication happens under a set of common terms
& conditions, common security and better management of loan.

Loan syndication involves multiple lenders and a single borrower, the term is generally reserved for loans
involving international transactions, different currencies and a necessary banking cooperation to
guarantee payments and reduce exposure. A loan syndication is headed by a managing bank that is
approached by the borrower to arrange credit. The managing bank is generally responsible for negotiating
conditions and arranging the syndicate. In return, the borrower generally pays the bank a fee.

As the large investment is increasing day to day, borrower needs fund without minimum transaction
hassle with minimum funding cost. Government also restricted the funding limit of the financial
institutions. In this situation loan syndication seems a better solution for both the borrower and loan
provider

Loan syndication is required for financing large projects, complying with Bangladesh Bank's guideline of
'Single Borrower Exposure Limit'. It diversifies risks of the lenders and builds reputation of the borrower
as many banks and financial institutions participate in the loan arrangement to set up large sized projects.

Term loan syndication is the most popular form of syndication in Bangladesh. Now a days working capital
financing, foreign currency financing & LC facility are also common in deal structure.
In 90's, some investors started undertaking comparatively large sized projects in our country. Considering
the risks potential of such large financing, Bangladesh Bank asked financial institutions to introduce the
idea of syndication. At present, deal size has become much bigger, transactions have become more
complex, number of participants has increased, hybrid products have been launched and new &
nontraditional avenues for investment like tourism, aviation, etc. have been explored

Most prospective and large investment sectors in Bangladesh are Power, Telecom Textile Industries, Steel
Mills, Cement, Sugar Mills, Private Container Terminal, Gas Evaporation Project, Infrastructure
Development Projects, School & Hospital through foreign joint venture, Information & Communication
Technology etc.
Bangladesh is fast marching forward to become a mid-economy country due to achievement of about 6%
GDP growth during last decade through rapid industrialization, almost self-sufficiency in food and fantastic
earnings from exports and overseas workers remittances. Bangladeshi entrepreneurs therefore are in dire
need for syndicated loans from financial institutions to keep pace with this race of development.

Bangladesh is now poised to achieve rapid industrialization, economic growth and respectable GDP
growth. We believe that loan syndication has a great role to play in supporting initiatives in this respect.
The extensive use and reliance on syndicated loan market will surely help generate financial innovations
and provide large projects with more convenient, professional and custom-made services. Syndicated
loan business, based on the mechanism of sharing both risk and return, and pooling of resources and
expertise, add depth and breadth to financial markets in various ways.

Consortium
Like a loan syndication, consortium financing occurs for transactions that might not take place with a
single lender. Several banks agree to jointly supervise a single borrower with a common appraisal,
documentation and follow-up and own equal shares in the transaction. Consortiums are not built to
handle international transactions such as a syndication loan; instead, a consortium may arise because the
size of the project at hand is simply too large or too risky for any single lender to assume. Sometimes the
participating banks form a new consortium bank that functions by leveraging assets from each institution
and disbands after the project is complete.