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Hundi hits remittance badly

Published : 18 Sep 2023 10:21 PM | Updated : 19 Sep 2023 05:30 PM

Expatriates are attracted to the hundi due to illegal stay abroad and multiple exchange rates which have caused to reduce remittance flows.

Besides, the exchange rate gap between the formal and informal channels has encouraged remitters to use hundi and send money through such illegal channel, experts said.

On the other hand, some money exchangers involve directly with illegal hundi businessmen, which helps in money laundering, they added.

The country’s remittance inflow is continuously declining in the current fiscal year. Remittance inflow stood at $739.98 million in the first 15 days in 

September of the current fiscal year 2023-24. On an average, around $49.33 million came every day in September against $51.59 million every day in August.

The country witnessed an 18.78 percent decline in inward remittances in August compared to the previous month, marking the lowest inflow in the past six months.

According to Bangladesh Bank data, the remittance stood at $1.6 billion in August and $1.97 billion in July. 

Dr Ahsan H Mansur, Executive Director of Policy Research Institute (PRI), said, “The positive flow of remittances can never be sustained with incentives. To stop the hundi, the government first increased cash incentive to 2 percent, then it increased to 2.5 percent. 

But transection through the hundi is not closing even it is rising. What needs to be done here is to stabilize the dollar market. The difference between carb market and bank dollar prices should be reduced. As long as this difference is more, the hundi will not be closed.”

According to Bangladesh Bank available data, the country has received a total of $ 21.61 billion remittance in FY23, which was 2.75 percent higher than that in the previous fiscal where the country received $21.03 billion.

A senior official of the central bank said that various initiatives have been taken to increase remittances through banking channels. It is urged not to send remittances through illegal channels or hundi or any other illegal means, he said. Remittances are showing a good position at the beginning of this month, he mentioned. 

However, remittance flows witnessed a good start and stood at $1.95 billion in January 2023, the first month of the New Year, up about 16 percent over that in the corresponding period of the previous month that amounted to $1.69 billion. In January 2022, this figure was $1.70 billion.

According to the data of Bangladesh Bank, in the first six months of the current fiscal year 2022-23, expatriates sent about $10.42 billion.

Remittance from expatriates, one of the main sources of foreign exchange reserves, has started to increase again after various measures taken by Bangladesh Bank, including tough steps against illegal hundi money transferring business. In January 2023, expatriates sent an average of $62.90 million every day.