National, Front Page

Legal transaction spikes remittance

Published : 11 Nov 2020 10:08 PM | Updated : 12 Nov 2020 02:46 PM

Sending money home by expatriate Bangladeshi workers through formal channel is on the increase since June this year, leading to a spike in the remittance inflow.

Economists and bankers have attributed the rise in the use of formal channel in remitting money mainly to the ongoing coronavirus pandemic, which greatly affected hundi networks.

Bangladesh received record $17.62 billion in the first 10 months of this year in remittance, up 45 percent from the figure in the same previous period when it was $12.17 billion.

Experts said the remittance flow rapidly increased through official channels due to travel restrictions imposed by most of the countries in an effort to combat the coronavirus or COVID-19.

They also said that a decrease in the earnings of the family of expatriates left in Bangladesh prompted them to send home more money for the support of the family members.

On the other hand, many expatriates returned home permanently with their savings money as they lost their jobs, which also helped to boost remittance flow, they mentioned.

Some economists attributed the growth in remittance inflow also to a government provision of 2 percent cash incentive to remitters on inward remittance for the last fiscal year. 

The economists said expatriate workers have continued to send money home to meet family expenses despite their suffering from various crises, including financial constraints, due to the coronavirus pandemic.

Currently many expatriate workers do not have money in their hands as they could not work for a long period due to the lockdown, but many of them have borrowed money for sending them to their families, they added.

Economists said remittance has kept the country’s economy afloat amid the coronavirus crisis.

Eminent economist Zahid Hussain told Bangladesh Post, “Remittance inflow has increased in the last several months as expatriates sent their hard-earned money more through legal channels avoiding hundi trading amid Covid-19 pandemic.”

He said cash incentive to the remitters by the government helped boost remittance inflowing last FY and it also continued this year.

Many of the unskilled workers of Bangladeshis working in the middle-eastern countries lost jobs as many companies have temporarily closed while many small businessmen are passing critical time amid the coronavirus pandemic, he mentioned saying that they returned home with their savings.

Zahid Hussain said, “We need to create skilled manpower for jobs abroad side by side tapping new job markets like in the European region to further raise remittance inflow.”

“Otherwise it is unlikely that the growth will sustain next year as Bangladeshi expatriates have faced many challenges abroad,” he mentioned.

Zeba Alam, a Bangladeshi expatiate in Italy, told this correspondent that, “We are transferring more money at home through banking channel amid coronavirus crisis.”

“Last month we also sent Tk 300,000 at home to meet higher demand of my family expenses as because my father fell sick infected with coronavirus,” she added.

Mizanur Rahman, a local hundi trader, told Bangladesh Post, “We are facing big trouble this time as most of the countries shut down their flights due to coronavirus pandemic.”

Hundi is a form of informal money transaction which is not accounted for transfer of money in any country. It is basically an unconditional order in writing made by a person directing another to pay a certain sum of money to a person named in the order.

An official of Bangladesh Bank (BB) said that various time-befitting initiatives taken by the government have resulted in an increased awareness among expatriate workers to send their hard-earned money through legal channels, pushing up the remittance inflow.

This will significantly increase the remittance inflow through legal channels and discourage the ‘hundi’ business, economists said.

According to the Bangladesh Financial Intelligence Unit (BFI, 2017-18) annual report, the highest suspicious transactions and activities are taking place through digital hundi. Reporting organizations have reported 5,422 suspicious transactions worth Tk921.75 crore, it said. The number of reported suspicious transactions was 3,736 (value Tk1,163 crore ) during 2016-17 fiscal.

Dr Atiur Rahman, former Bangladesh Bank governor, told Bangladesh Post, “This is a good news that Bangladeshi expatriates are still sending remittances though millions of workers are toiling abroad amid insufferable conditions due to coronavirus pandemic and other predicaments.”

“Expatriates are virtually providing oxygen to our economy,” he added.

“Expatriate income has recently helped to stay positive on the balance of payment of the country, which was negative for a long time,” said Rahman.

“The higher growth of remittance inflow now is attributed to a budget declaration of 2 percent cash incentive by the government to remitters on inward remittance since the past several months,” he mentioned.

“Besides, the central bank has taken several initiatives, including providing an easy system giving remittance to remitters as well as buying dollars directly from the market for a stable forex market, which encouraged expatriates to send money through legal channels including banks,” he added.

Dr Atiur said, “The reality is that the impact of remittances on the economy is multidimensional and remittance is playing a big role in the whole socio-economic context, especially in transformation of rural economy.”

“It is possible and necessary to make the contribution of remittances to the economy stronger through proper patronage,” he added.

Atiur said that this is the highest monthly remittance received in the country’s history helping push foreign currency reserves up to $41 billion that is good news for the country.

He strongly recommended that immediate measures should be taken to look into the problems of all wage-earners abroad facing a crisis amid the covid-19 situation.

Rahman urged the government to address the problems of the foreign wage earners on priority basis in order to keep the flow of the foreign remittance going smoothly.

Remittance inflow registered a 10.85 percent growth in the just concluded 2019-20 fiscal year over the previous FY to hit a record high of $18.20 billion despite the Covid-19-induced ongoing global economic recession and fall in oil prices.

The country’s remittance inflow witnessed a record high reaching almost $2.60 billion in July, which for the first time in the history of Bangladesh crossed the remittance inflow to $2.50 billion.

Bangladeshi expatriates sent home $11.65 billion in FY11, $12.84 billion in FY12, $14.46 billion in FY13, $14.23 billion in FY14, $15.31 billion in FY15, $14.93 billion in FY16, $12.77 billion in FY17 and $14.98 billion in FY18 respectively.

More than 1.02 crore Bangladeshi expatriates are currently working in some 174 countries across the world.