Hundi still hinders increase of remittance

Zarif Mahmud: The government is giving two and a half percent incentive to increase remittance flow through legal channels. However, the trend of sending money to hundi has not decreased. Banks have announced another two-and-a-half percent incentive as remittance flows have slowed in the last few months. All in all, if someone sends a remittance in a legitimate way, now they are getting more than Tk 116 against one dollar. Almost the same amount of money is found in Hundi. Those concerned say that if the hundi is not stopped, this incentive will not be useful for a while.
If there is a large difference in the exchange rate of money against the dollar in the country, expatriates will tend to send dollars illegally. For this, the hundi should be closed. Financial intelligence agency BFIU is in a tough position with the law enforcement agencies to ban hundi. Even then, transactions in hundi cannot be stopped. In addition to incentives, the sector stakeholders expect that remittances will increase if awareness is increased.
The dollar crisis in the country is still acute. Bangladesh Bank is constantly providing dollars from foreign exchange reserves to control the market. Reserves have also been strained. According to the IMF’s BPM6 accounting system, the country’s spendable reserves are now in the $20 billion range. Although economists say, in reality this reserve is much less.
On the other hand, expatriate income, one of the means of foreign exchange income, is not coming as expected. Despite the increase in expatriates, legal remittances are not increasing. Due to this, incentives to increase remittances through legal channels have also been increased.
Now the government and banks are giving five percent incentive to bring remittance through legal channels. One US dollar is Tk 110.50 in expatriate income bank. Along with this, the government gives two and a half percent incentive. In that one dollar was Tk 113.26 a little more. Banks are giving another 2.5 percent. As a result, expatriates are getting a little more than Tk 116 per dollar.
The new move will encourage expatriates to send remittances through banking channels. In this expatriate will send money safely without risking hundi. In the meantime, it has also received positive response in the last few days.
According to the latest report of Bangladesh Bank, in the first 27 days of October, expatriates sent remittances of $165 million through the banking channel, which was $134 million in the previous September. According to that, in the first 27 days, $31 million more than last month. Officials of the relevant departments of the central bank say that remittances have increased due to the doubling of the previous 2.5 percent incentive to 5 percent per dollar.
Afzal Karim, chairman of Bangladesh Foreign Exchange Authorized Dealers Association (BAFEDA) and managing director of Sonali Bank said, “We have discussed the situation of the dollar market. From now on, the bank will give 2.5 percent incentive to expatriates from its own income. But it cannot be taken from importers again. Expatriates will be encouraged by this new decision. Remittances will increase through legal channels.
Economists believe that the newly announced two and a half percent incentive should not be decided to solve the ongoing dollar crisis in the country, the dollar rate should be completely left to the market to implement it, and the monitoring should be increased. They think that there is a possibility of getting good results only if the dollar rate is based on the market.
The research director of South Asian Network on Economic Modeling (SANEM) Saima Haque Bidisha said on the matter, “In the case of remittances, it has been decided to give an incentive of up to two and a half percent to the banks. This will not work in the long run, unless the difference between the official-unofficial dollar rate narrows. If there is a price difference, expatriates will send dollars illegally. Strong action is needed to close the channel of those who do business through hundi. If they cannot be controlled, there will be fear in foreign currency.
The head of treasury department of a private bank said the same thing. He said, “Expatriates from our country are increasing, but remittances are not coming in comparison to that.” Only incentives will not work. Even if the price of remittance increases through legal channels, the price of hundi will also increase. In this case they should stop hundi. If we can do this, we will never have a dollar crisis.
MFS companies active in anti-money laundering. If they get suspicious transactions, they are monitoring it themselves. Muhammad Zahidul Islam, head of public relations department of Naqd, said, “If a person transacts after 2 am for more than one day, we check it. It may be a day or two. We monitor transactions at the same time every day. Again, only send money is being received from an account and the medium is not being used, there is a matter of doubt. Recently more than 300 SIMs have been blocked in Chittagong region for various crimes. We were not there either. However, for the sake of the country, we must come forward to prevent money laundering.
On the other hand, the Bangladesh Financial Intelligence Unit (BFIU) formed to prevent money laundering and terrorist financing has adopted a zero-tolerance policy to prevent hundi, gambling, crypto currency. Head of the organization Masud Biswas said, “Trafficking in the hundi process is increasing. The economy is suffering. The country is losing a lot of foreign exchange. There is a zero tolerance policy against hundi, online gambling, gaming, betting, forex and crypto trading.
He said, “Every day 200 accounts are being frozen due to suspicious transactions. 20,725 personal accounts involved in gambling or hundi have been suspended. 814 websites, 159 apps, 337 Facebook pages and multiple Instagram-YouTube links are in the hands of law enforcement agencies. Besides, many have come under the law, the operation is going on with the help of various organizations.