Year: 2023 | Month: December | Volume 68 | Issue 4

Examining the Impact of the Hundi System on the Economy of Bangladesh: Evidence from the Northern Area of the Country

Prosannajid Sarkar and Habibur Rahman
DOI:10.46852/0424-2513.4.2023.6

Abstract:

Bangladeshi law forbids the use of the informal remittance system known as “hundi.” It is not supported
by law. The purpose of this study is to comprehend the benefits and drawbacks of Bangladesh’s Hundi
system. Data from 400 respondents in total were used to assess the survey results. The research was
conducted using both a qualitative and quantitative technique. The research employed purposive and
snowball sampling. Descriptive statistics revealed that three-fourth of the hundi consumers, 40% of the
hundi business operators, and 67% of the key informant’s transacted money to India only, and the rest
transacted to India, Nepal, Bhutan, and Sri Lanka. All the respondents transacted a huge amount of money
to the above countries for the purpose of business, treatment, education and migration. The consumers
provided and the business operators took commissions at a rate of 2-10 Taka for money transaction. To
transact money via hundi, majority of the respondents did not require to submit/have any document,
whereas a few required to provide/have NID and mobile or bank details. The respondents brought goods/
products through hundi, and goods/products were cosmetics, stones, Agri products, medicine, bicycle/
bike parts, electronic products, spices, cow, fish, and Sharee. Majority of the consumers felt comfortable
sending money through hundi, and majority of the respondents suggested to provide business license/
legal basis to the hundi business. The findings and associated policy recommendations are deemed
helpful to understand the impact of hundi system on Bangladesh economy. The findings of this project
would help the policy makers and planners formulate appropriate policy and programs regarding hundi
system in Bangladesh.

Highlights

  • The paper might provide an overview of what the hundi system is, its historical context, and how it functions.
  • m Since the paper specifies evidence from the northern area of Bangladesh, it may highlight regional variations or specific factors influencing the hundi system in that particular area.
  • The paper may delve into the impact of the hundi system on the economy of Bangladesh. This could include its effects on formal banking, government revenue, and overall economic stability




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