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June 24, 2019

How hawala, hundi business goes on

Top Story

June 24, 2019

ISLAMABAD: Majority of Pakistan’s registered Forex companies collect at least $40 million ($42 million is also quoted by private market players) in a single day and deposit with State Bank of Pakistan just $10 million.

Remaining $30 million is used for hawala/hundi business, which is highly profitable business for the operators of these transactions. A background discussion with persons handling hawala/hundi business revealed that in case Forex companies deposit dollars purchased from open market, with SBP, they earn one rupee and maximum two rupees per dollar. If they use this money for hawala/hundi, they earn 4/5 rupees per dollar, which is highly profitable business.

Forex market sources further disclosed that dollars purchased from market are sent abroad mostly through air route and most of the agents travel to three different destinations every day and come back next day. Two of these destinations are in Middle East and one in Far East. Profits earned, from this business, is distributed among all Forex companies equally, and agents of these companies travel daily to transport cash abroad, mostly from Karachi international airport. On airport, all agencies deputed to check smuggling are part of this dirty game, The News learnt reliably.

A source in Finance Ministry, privy to this business, disclosed that issue was discussed at the highest level in Islamabad many times and every time directions were issued to stop this business but these were never implemented.

If counted this figures is over one billion dollar a month, which flew abroad through black market. So, in a year at least $12 billion flew from Pakistan. Then this cash comes back through banking channel, mainly telegraphic transfer (T T). On Return fifty percent of this cash is retained with forex dealers and fifty percent submitted with SBP. The News also learnt that the money retained in shape of foreign currency is provided to the importers who use to make payments of under-invoiced imports and they make payment abroad or is utilised to buy property in other destinations.

On other side, Pakistan has to accept a list of harsh conditionality attached by International Monetary Fund (IMF) to get $2 billion in a year or six billion in three years. Now Pakistan is likely to enter in package with IMF for which staff level dialogue has been completed and approval from IMF board is awaited.

A renowned business man from Karachi while taking to The News said that these figures are almost correct and there dire need to stop this illegal business which will be helpful to stop rupee devaluation at this stage. Otherwise, inflation will be unmanageable and effect business as well as common man negatively, he added. He also suggested that SBP should make efforts to get the entire dollar and other currencies from forex agents every day at an agreed rate, and this was only possible if a win-win situation for SBP and forex dealers is created.

When The News asked SBP governor in his first press conference to frame a mechanism to tap this huge amount of dollars which are smuggled out of Pakistan, he said if SBP purchases dollars from Forex market, this will create panic, which will be more harmful.

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