Bangladesh expatriates sent home a record US$ 3.81 billion in the first eight months of fiscal 200607, marking a 27.23 per cent growth over that of the same period of last fiscal, the central bank sources said. The country’s foreign exchange reserve stood at $4.14 billion on March 5 due to robust growth of remittances from Bangladeshis working abroad. The remittance in the period is seen as a continuation to last fiscals trend and record inflow of $4.806 billion. The growth in 200506 was 24.89 per cent over the previous fiscal.

According to the provisional estimates of the Bangladesh Bank (BB), the country received $3.81 billion during the July-February period of the current fiscal against $2.99 billion in the same period of the previous fiscal. The remittances from Bangladeshi nationals working abroad were estimated at $490.03 million in February, recording a 5.94 per cent growth over the previous month. In January, the remittance was worth $462.55 million.

Currently, some private commercial banks (PCBs) along with the nationalised commercial banks (NCBs) are desperately trying to increase the flow of inward remittances from different parts of the world, including Middle East, United Kingdom, Malaysia, Singapore and Italy. Earlier, the central bank took a series of measures to encourage the expatriate Bangladeshis to send their hard earned money through the formal banking channel instead of the illegal hundi system and boost the country’s foreign exchange reserve.

Besides, the BB has already directed the commercial banks to expedite delivery of remittances to the beneficiaries at the quickest possible time to encourage expatriates to use the banking channel for fund transfer.

Most of remittances still thru informal channels: ADB

Expatriate Bangladeshis still send home a major portion of their earnings by illegal and informal means such as hundi, although the remittances have grown significantly in recent years, according to an Asian Development Bank report. A recent report of the finance ministry has also emphasised strengthening the process of repatriating remittances through the banking channels.

The country received $4.8 billion from nonresident Bangladeshis in the last fiscal year, marking a 25 per cent rise over the amount received in FY200405, while the first seven months of the current fiscal year has seen about 30 per cent growth in remittances from abroad. To encourage expatriate Bangladeshis to use the official channels more for remitting money home, the latest quarterly economic update of the ADB stressed the need for boosting capacity and efficiency of the financial institutions by integrating remitters and recipients into the legal financial system.

Increasing public awareness of the benefits of the legal banking system and potential hazards of informal transfers will greatly help those who are unaware, the multilateral lending agency said, referring to the lack of access of relatives of rural migrant workers to bank accounts and the complicated official procedure including the paper work they faced.

Hundi operators receive foreign currency from Bangladeshi workers abroad and pay the money to their relatives here in local currency that keeps the remitted foreign currency outside the formal economy. The ADB blamed capacity constraints and inefficiency of the formal banking system, insufficient number of bank branches in rural areas, procedural complications, and transaction costs for the continued illegal transfer of money by nonresident Bangladeshis.

It prescribed creation of a better network by private commercial banks in partnership with the licensed microfinance institutions, and even local post offices, to widen their service area coverage. Harmonising regulatory and compliance requirements of financial institutions between source and destination countries is required to meet the demand for legal transfers and [to] fully capitalise on the benefits of these valuable remittances in Bangladesh, the ADB added.

In 30 years since Bangladesh entered the overseas employment market in the middle 1970s, it so far has received $41.4 billion foreign exchange in remittances from abroad. The remittances, which amounted to a mere $10 million in FY197576, reached a billion-dollar-level in FY199394 and jumped to $2.5 billion in FY200102 following government initiatives to bring them through official channels, official statistics show. When contacted, officials at the expatriates welfare and overseas employment ministry said they had little to do with the remittance process of money by migrant workers as other government agencies were supposed to deal with the hundi issue.