Expats send $1.25b remittances in 20-day

Cash incentive on remittance increased to 5pc

Rafiqul Islam Azad: Expatriate Bangladeshis sent remittances of 125 crores and 70 thousand dollars to the country through legal and banking channels in the first 20 days of October. In Bangladeshi currency, the amount is equivalent to about Tk 13,834.17 crore, according to the latest report from Bangladesh Bank, which was revealed on Sunday.

Experts say this flow indicates a continued downward trend in remittances, despite various initiatives by the government to increase the amount of remittance. The current month is also experiencing a slowdown following the previous trend.

If this trend in remittances continues, by the end of the month, 186 crore dollars in remittances or expatriate income will have been sent to the country, they said.

Meanwhile, as part of the initiatives to increase the volume of remittance, the amount of incentive for remittance has been increased to five percent from 2.5 percent. With the new decision made yesterday by the Association of Bankers, Bangladesh (ABB) and the Bangladesh Foreign Exchange Dealers Association (BAFEDA), expatriates are now supposed to receive a five percent incentive if they send remittances to the country through legal channels. As a result, expatriates or remittance earners will get Tk 116 for every one dollar of remittance.

The decision was made during a virtual meeting of the Association of Bankers Bangladesh (ABB) and Bangladesh Foreign Exchange Authorized Dealers Association (BAFEDA), the organization of chief executives of banks, held yesterday in an effort to increase the pace of remittances through legal channels and to overcome the dollar crisis. The decision has been effective from Sunday (yesterday), as confirmed by Afzal Karim, Chairman of BAFEDA and Managing Director and CEO of Sonali Bank.

Bank officials said that dollars are not available at the fixed price. In this situation, the decision was taken to tackle the dollar crisis. Following this step, expatriates will be more interested in sending remittances through legal channels.

Informed sources said the dollar value of remittance and export earnings in banks is now Tk 110. The dollar price for sale to importers has been fixed at Tk 110.50. The value of the dollar in the interbank system is also Tk 110.50. However, the dollar rate in the open currency market is Tk 118 per dollar, which is why expatriates are more interested in sending remittances through Hundi or illegal channels. As a result, remittances through formal or banking channels are decreasing.

Remittance is an important indicator of Bangladesh’s economy in the current world context because the ups and downs of reserves depend on this index, said the sources.

Considering this issue, banks will now be able to buy remittance dollars at a higher price of two and a half percent. That is, with the government’s 2.5 percent incentive to bring remittances, banks can now offer a 2.5 percent incentive if they choose to do so.

A review of the data shows that the amount of remittances that came into the country on the 20th day of this month included 10 crore 15 lakh 20 thousand dollars through state-owned banks, 4 crore 15 lakh 30 thousand dollars through a specialized bank, 110 crore 31 lakh 10 thousand dollars through private banks, and 39 lakh 10 thousand US dollars through foreign banks.

In the first month of the fiscal year 2023-24, remittances in July were 197 crore 31 lakh 50 thousand US dollars, and in August, remittances were 159 crore 94 lakh 50 thousand US dollars. The amount of remittances decreased by 37 crore 37 lakh US dollars in one month. Finally, 134 crore dollars came in September, which is the lowest in the last 41 months. Earlier in April 2020, 109 crore dollars came as remittance.

Bangladesh Bank is supplying dollars from the country’s foreign currency reserves due to the dollar crisis. As a result, the reserve of foreign currency is constantly decreasing. In the last week, the reserves have decreased by about 11 crore dollars, reducing the amount of reserves in the central bank by 21 billion dollars or Tk 2100 crore.

Remittance is the cheapest source of US dollars for Bangladesh and is a key pillar of the economy. However, inflows dropped to a 41-month low of 134 crore dollars in September despite a record outflow of workers in recent times.

More than 11.35 lakh Bangladeshis left the country for jobs abroad last year, nearly double the 6.17 lakh migrant workers who went to other countries in the previous year.

The buying rate of US dollars, except for remittances, remains unchanged at Tk 110, and the selling rate at Tk 110.50. The inter-bank exchange rate was Tk 85.8 in January last year.

The US currency has been gaining against the taka for the past one and a half years amid depleting foreign exchange reserves, driven by higher import bills against lower-than-expected remittance and export receipts.