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Remittances up again amid tough anti-hundi stand

Published : 13 Dec 2022 09:54 PM | Updated : 14 Dec 2022 05:16 PM

Remittances again witnessed a rising trend after various measures taken by Bangladesh Bank including tough steps against illegal hundi money transfering business.

The Bangladesh Financial Intelligence Unit (BFIU) of the Central Bank has temporarily suspended the withdrawal of 230 beneficiaries of remittances sent through Hundi recently. 

BFIU said that the accounts will be opened if they promise to send remittances through legal channels in future.

Besides, the government is providing different facilities to remiters including 2.5 percent cash incentive against remittances sent through legal channels, CIP honorarium to remittance senders, expansion and simplification of remittance disbursement process, investment and housing finance facilities for non-resident Bangladeshis. 

Apart from this, international money transfer operators have been encouraged to set up drawing system with Bangladesh Bank under fintech system and the charge fee of banks or exchange houses for sending remittance has been waived.

Bangladesh Bank has said that strict measures will be taken if remittances are sent through illegal hundi.

In a press release on November 16, the central bank said in view of the decline in the flow of remittances sent by expatriates through banking channels over the past few months, expatriate Bangladeshis and their family members are being informed that sending hard-earned foreign currency outside banking channels (through hundi or any other illegal means) is a punishable offense. 

The Central Bank also said, “Send your earned valuable foreign currency to the country through legal channels or banking channels instead of sending it through hundi or any other illegal channels, make a valuable contribution to the country and keep your family members safe and risk-free.”

Bangladesh Financial Intelligence Unit (BFIU) is taking appropriate measures against all those involved in sending remittances through illegal channels subject to any evidence.

Finally, Bangladesh Bank has made the process of bringing remittances from abroad through legal channels easier. 

The Central Bank has made it possible for expatriate income to send money directly through Mobile Financial Services (MFS) institutions such as Bikash and Rocket.

Bangladesh Bank issued a circular on November 29 and said that from now on, expatriates can send remittances to the country on their mobile phones. 

Officials of the central bank said that this initiative has been taken to make the process of bringing remittance easier to prevent hundi.

Dr Zahid Hussain, a former lead economist of the World Bank's Dhaka office, told Bangladesh Post that imposing multiple exchange rate for exporters, importers and inward remittance is the key reason for encouraging expatriates to send money through hundi which pushed down remittances.

He said, “Look at the month-on-month remittance-inflow trend. In the first two weeks of September, Bangladesh received nearly $1.0 billion worth of remittance. But it started to fall from the 3rd week. During 3rd and 4th weeks of September, the workers sent some $500 million. In October, the remittance fell further.”

“If a Bangladeshi expatriate in an overseas country sends foreign exchange to Bangladesh through exchange house, his family will get money at Tk 108 against one USD from the exchange house and Tk 99 from the banks and non-banking institutions. At the same time, he can get Tk 112-116 in the informal channel,” he mentioned.

Economists and bankers said remittances returned to a positive trend in November after falling for two consecutive months due to various measures taken by the central bank. 

As the trend turned more positive in December, relief began to return, they said, suggesting that the Central Bank should take tougher steps to ban hundi to increase remittances through legal channels.

Bangladesh Bank officials hope that the amount of remittances will reach $2 billion in the month of December like July and August this year.

However, a continued decline in remittance flows from expatriates was increased in November. 

In the first nine days of this month (December), expatriates sent around $540 million after various measures to increase expatriate income in banking channels. As part of its move, an average of $60 million came every day in December.

Last November, expatriates sent $1594.70 million. An average of $53.10 million came every day. In the previous two months, October and September, $49.20million and $51.30 million respectively came daily.

In the first two months of the current fiscal year 2022-23, in July and August, remittances came to the country in the amount of about $70 million per day.

However, remittances stood at $2.09b in July, $2.04 billion in August, $1.54 in September and $1.52 billion in october in the current fiscal year 2022-23.

Bangladesh received record $2.10 billion remittances in July, the first month of the fiscal year 2022-23, due to Eid-ul-Azha festival when expatriate Bangladeshis usually send home more money than any other time. 

The figure is the highest in 14 months and 12 percent higher than the $1.87 billion remittance the country received in the same month of the previous FY.

However, Eid-ul-Fitr was celebrated in the country on May 3. Expatriates sent a total of $2.09 billion in remittance to the country in April ahead of Eid. It was the highest amount in a single month of the last fiscal year.

The country received $22.07 billion in remittances in 2021, which was higher than any other years in the history of Bangladesh. This inflow was $21.78 billion in 2020 and $18.33 billion in 2019.

This important index of the economy increased last December and January after a decline in five consecutive months (July-November 2021). In December and January, remittance was $1.63 billion and $1.70 billion respectively.

In February, this inflow dropped again as expatriates sent $1.49 billion during the time.

However, the country’s migrants sent home $1.86 billion in March ahead of Ramadan this year, which is 25 percent higher than that of the previous month and also the highest in the past eight months.

On the other hand, Bangladesh’s reserves are increasing again despite the Bangladesh Bank giving a record amount in dollar support to the commercial banks from the reserves.

Experts said the reserves are rising slightly again thanks to a declining trend in import payments.

Till last November 30, reserves, the most important indicator of the economy, dropped to $33.86 billion, falling below $34 billion.

In the past few days it has risen again to cross $34 billion and on Thursday, the amount of reserves was $34.02 billion, according to BB data.

On August 24 last year, the reserves crossed the $48 billion milestone, surpassing all past records.