UPSC Prelims 1996·GS1·economy·money and banking

Hawala transactions relate to payments

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Last updated 23 May 2026, 3:31 pm IST
  1. Areceived in rupees against overseas currencies and vice versa without going through the official channelsCorrect
  2. Breceived for sale/transfer of shares without going through the established stock exchanges
  3. Creceived as commission for services rendered to overseas investors/buyers/sellers in assisting them to get over the red tape and/or in getting preferential treatment
  4. Dmade to political parties or to individuals for meeting election expenses

Explanation

Hawala is an informal method of transferring money without any physical movement of cash or the use of formal banking systems. It works on a parallel network based on trust and a system of local brokers. In these transactions, money is paid in one country in its local currency, and an equivalent amount is paid out in another country in its respective currency through an unofficial agent. Since these payments bypass the official banking channels regulated by the government and central banks, they are often used to avoid taxes or move money across borders anonymously. Option A accurately describes this process of exchanging rupees for foreign currency outside the formal financial system.
economy: Hawala transactions relate to payments
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