THE SOCIAL ORGANIZATION OF HUNDI

Abstract

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 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.