Reasons behind the collapse of remittance
Mahfuz Emran: When the country’s dollar crisis is at its peak, expatriate income has collapsed. In the recently departed month of September, the expatriate income came to $134.37 million. In Bangladeshi currency (one dollar is equal to Tk 109.50), the amount is Tk 14,712 crore. This is the lowest in the last 41 months.
Earlier, in April 2020, $109.30 crore came. After that, no month before September saw so few remittances.
The sector concerned say that the decline in remittances is unusual. According to them, 2 million workers have gone abroad for work in the last two years. While diaspora is increasing abroad, remittances are decreasing day by day. They urged to find the cause and solve it.
The updated data of Bangladesh Bank says that $134.37 crore have come in the entire month of September, which is $196 million less than the same month of last year (September). $153.96 million came in September last year.
Out of this, $118.60 million came through state-owned banks, $3.51 million came to one of the two specialized banks. $118.48 crore came through private banks and $50.60 lakh came through foreign banks.
Before this, expatriate Bangladeshis sent remittances of $197.30 million ($1.97 billion) last July. Expatriate income of $1.59 billion came in August. Last June, a record $2.19 billion of expatriate income or remittances came into the country. That was the highest for a single month in nearly three years. Prior to this, July 2020 saw a record expatriate income of $259.82 million.
According to the sector concerned, in 2020, the highest remittances came through the banking channel due to the closure of Hundi due to Corona. An analysis of the last four fiscal years concluded showed that the remittance volume was the highest in the fiscal year 2020-2021. In the financial year 2022-2023, expatriates sent remittances of $2,161 million through banking channels. This is the second highest ever. Earlier, during the corona period, the maximum remittance of $2,477 million dollars came to the country in the fiscal year 2020-2021.
In this regard, a senior official of the Bureau of Manpower Employment and Training (BMET) said that from June to mid-September this year, 617,576 workers went to different countries around the world. In 2022, 11 lakh 35 thousand 873 workers went abroad from Bangladesh. Expatriate income stands in contrast to the rate at which workers have migrated.
The managing director of a private bank said that the income of expatriates can’t be brought through the banking channel. It reduces remittances. He blamed the fixed rate of the dollar for this.
He told that one dollar is being sold at Tk 117 to Tk 118. There, Tk 109.50 is given for one dollar of expatriate income. With this two percent incentive of taka 0.50 stands at Tk 111.50.
He said that the same expatriate is getting Tk 115 to Tk 116 if sent through hundi. They get taka four to five more for one dollar. Then why send to banking channel, he asked. This is affecting the reserves. Because when it comes to hundi, the dollar stays outside, it doesn’t come as cash. He commented that awareness of banking channels is also important.
This calculation of rate difference has been found in other currencies as well. Our Chattogram Correspondent said that if you send money from the United Arab Emirates to the country through a bank, you get Tk 29.93 for one dirham. If sent in hundi, one dirham gives Tk 31.60. 1000 dirham gives Tk 29,930 to the bank and Tl 31,600 is available in hundi. 1000 dirhams are available in hundi more than Tk 1,670 than bank. For this reason, many expatriates send money to Hundi instead of sending it to the bank.
As it is an election year, the central bank did not want to comment on remittances. However, Bangladesh Bank Executive Director and spokesperson Mejbaul Haque said that the central bank is working to increase awareness to prevent hundi. Bafeda and ABB are fixing the dollar rate. Bangladesh Bank is supervising it.
Meanwhile, financial intelligence unit BFIU is on a strict stand against illegal transactions through hundi, online gambling, gaming, betting, forex and cryptocurrency trading to increase the flow of dollars into banking channels.
Head of the organization Masud Biswas said that BFIU is working together with other organizations to stop all types of money laundering to prevent money laundering and terrorist financing. Many have been brought under punishment, many have been referred to various agencies recommending punishment.
Meanwhile, Bangladesh Bank is releasing dollars from reserves in the market to meet the emergency import liability in the crisis. The reserve is constantly decreasing. According to International Monetary Fund or IMF’s accounting method BPM 6, the reserves of the central bank are now $2,115 billion. BPM 6 accounts for reserves like consumption in the country. Although according to Bangladesh Bank’s own accounting system, the country’s reserves are $2,706 million. Before this, the reserves increased to $48 billion in 2021.
Seeking expert advice on the dollar crisis, Finance Minister AHM Mustafa Kamal recently said the government would accept any positive reform proposal to increase remittance flow. They will be implemented quickly. If the remittance flow increases, the foreign exchange (dollar) crisis will be reduced. It will also solve other problems.
I think that some disinformation is also working behind this remittance crisis.
A foreign intelligence agency told that a large business group having control of 7 bank, have been sucking foreign currencies from the major Bangladeshi labour markets. They are collecting foreign currencies from the Bangladeshi labourers in abroad and instruct their banks to deposit the local currency (taka) to their beneficiaries’ accounts in Bangladesh. The group is making investment in abroad and is also adjusting their disputed investments as well, the source added.
The group has earlier practiced same when they have invested huge amount of fund in Singapore, Malaysia, Canada, Italy, Saudi Arabia and UK, the intelligence source told Daily Industry.
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