Hundi
Hundi ( hunḍī or hunḍawī ) are financial documents of cashless payment transactions, which are used for short and medium-term (interim) financing of commercial transactions in the Indian culture. In different variants, they can have the function of a check , (own) bill of exchange , credit or savings certificates, but they can also be used for transfers. The underlying processes then resemble that of the hawala financial system. What is important is the underlying trust between the parties involved, which is secured particularly through common caste membership or extensive kinship. As a rule, the fees are significantly cheaper than with banks. For small loans and before cooperative banks became active in rural areas, they were the only, but very flexible, financial instrument available to Indians of the merchant class.
The local bankers and moneylenders are known as sahukar or sarraf , anglicized shroff, and they were often money changers, brokers and dealers on their own account at the same time. Depending on the region, they mostly belonged to certain castes . In Rajasthan , they were often Marwari, in Punjab Khattris, from Sindh came Multani and Shikarpuris, while in the Tamil-speaking south Natukottai Chettiars the Kallidaikurichy- (Nakarattars) and Brahmins dominated the money business. The Nakarattar financed much of the capital flow between southern India and colonial Burma.
variants
The basic principle, analogous to a change, was the following: A paid the Shroff S at the place of origin a certain amount, for which he received the Hundi, often with a fixed payment term. A sent this to B (usually elsewhere), who presented the document to Shroff T corresponding with S for payment and received it after a certain period of time. However, promissory notes could also be sent, i.e. H. A borrowed a certain amount from S, sent the dog to B, which was paid to T within a certain period of time after presentation. It was also possible to have a regular account with the Shroff. In any case, regionally strongly different interest rates and commissions were due, but these were significantly lower than those charged by European bankers. The interest rate in the 1640s was between 0.6 and 1¼% for Hundis from Surat to Achmedabad, and 2.7-3½% pm to Agra. The text of the document, which is often written in a peculiar italic type, regulates the due date or portability. In the 20th century, interest rates were significantly lower. Some types:
- Dharsan dogs
are payable from an account with a shroff, at the specified location and deliverer on sight, which usually means a period of three days.
- Nadappu dogs
are only common among the South Indian nakarattars. They are also paid from an account balance, but on a date determined by the Shroff himself. For the period, interest is paid at the nadappu rate .
- Mudatti or Thavanai dogs
worked similarly to overnight deposits. The shroff only has to pay after a certain "rest period" ( thavanai ), usually between 60 and 120 days.
- Khadi dogs
Khadi-Hundi were issued in several series in the early 1950s. Issuing organizations were the All India Khadi & Village Industries Board (valid until March 31, 1955) and the Khadi & Village Industries Commission . Before they went into circulation, they were stamped and signed. Similar in appearance to contemporary banknotes, however, they had an expiration date and, although freely transferable, were intended for purchase by khadi .
history
There was a well-developed and diversified financial system in the Mughal Empire . India is poor in its own sources of mintable metals, the import of which was an important commodity. The basis of finance was the Sikka rupee . A large part of the coins was more or less permanently bound by the tax payments for khalsa land. A cashless payment system developed almost inevitably, in which the Hundi were the most important instrument from the 17th century. The largest houses were Virji Vohra in Surat and, in the 18th century, the Jagat Seth family in Murshidabad, who transferred up to 10 million a year to Delhi. Despite Islam's prohibition of interest, Muslims also worked as bankers.
With the introduction of the standardized Silberrupie (180 grain, 11/12 pure) by the British in 1835, the Shroffs lost money exchange as an important source of income.
Hundis were most widespread in the years after the First World War. The Central Banking Inquiry Committee estimated in 1929 that nearly 90% of indigenous foreign trade was financed through these unregulated instruments. Thereupon attempts were made to curb their use. With the expansion of modern banking, the number of Hundis in circulation decreased sharply from 1960, but they are still in use in South Asia today. The total control of people and money movements attempted under the guise of terrorist hunt in recent years has led to Hundis being viewed with suspicion.
fees
In addition to the fees that the Schroffs charged for discounting and default risks, there were government fees during the colonial era. The colonial rulers, who recognized the importance of the Hundi in economic life, soon began to levy stamp duty on various documents, following the example of the motherland . Their payment was evidenced by the affixing of a corresponding seal or stamp from the “Stamp Office” of the respective “Presidency”, later fee stamps. Such stamp regulations (e.g. Regulation XII in Bengal in 1828) met with resistance from the bankers. The smaller Shroffs in particular evaded the tax. Often a dog was redefined from a bill of exchange to a simple letter so that no stamp duty was due. However, only properly stamped Hundis could be sued in court.
Following the adoption of the Indian Stamp Act , in February 1879, who took over from the British law the term "bill of exchange" for all types of Hundi, but what described the function of this instrument only partially, it was after usual drawn on the domestic Hundi 1880 mostly only to be used on standardized forms (218 × 130 mm) with tinted paper, watermarks and already imprinted revenue stamps. The stamps on the forms show the word "Hundi" above the portrait of the ruler (from 1947 the Indian coat of arms), underneath the fee. Higher fees could be paid by adding extra stamps (sometimes also postage stamps). In financial year 1889, the revenue stamps sold for Hundi accounted for 5.6% of the total. These forms, the design of which was changed with the introduction of the decimal rupee in 1954, remained in use until 1971. After that, the appearance was changed again.
Dogs drawn especially for foreign countries (stamps with “Foreign Bill”) continued to be issued by hand on plain paper. The fee applied by stamps is usually lower than for the official forms.
Several princely states also introduced mandatory fees. As long as there was no agreement with British India, cross-border dogs were then charged twice.
literature
- Colin R. Bruce, II .; The Standard Guide to South Asian coins and paper money since 1556 AD; Iola / Wis. 1981, 608S; Chapter: Hundis S 531-55
- Chitaley, VV; S. Appu Rao; The Indian Stamp Act (II of 1899) with exhaustive, explanatory and critical commentaries, AIR Commentaries; Nagpur 1951
- Habib, Irfan; The system of bills of exchange (hundis) in the Mughal Empire; Proceedings of the Indian History Congress, 33rd Session, Muzatarppur, 1972, pp. 290-303. New Delhi
- Marina Martin; Hundi / Hawala: The Problem of Definition; Modern Asian Studies, Vol. 43, No. 4 (Jul., 2009), pp. 909-937
- Om, Prakash; Cashless Payment Mechanism in Mughal India: The Working of the Hundi Network; Paper presented at Session 2 of the International Economic History Congress, Helsinki, 21. – 25. August 2006
- Rudner, David West; Caste and Capitalism in Colonial India: The Nattukottai Chettiars; Berkeley 1994 ( full text )
Laws
- Indian Stamp Act (I of 1879); amended by Act II of 1899 ( full text ), also: RULES UNDER THE INDIAN STAMP Act, 1899 (as of 1925)
- Negotiable Instruments Act 1881, revised 1958
- Punjab Regulation of Accounts Act (1930) and the Moneylender Acts of other provinces, in the following years, required the registration of indigenous shroffs and moneylenders.