Remittance inflow in the first quarter of the current fiscal year jumped by 16 per cent to $1,542 million from $1,330 million in the same period of the last fiscal year, according to central bank statistics.

The money inflow went up to $592 million in September from $471 million in August ahead of the Eid and Puja festivals, said a Bangladesh Bank official.

‘Before any festival, remittance inflow goes up and this year it has been no exception,’ he said, despite three to four work days lost in August due to a law and order situation.

The country received about $6 billion remittance in the last fiscal year which cushioned the shock of more than $3.3 billion trade deficit.

The central bank has also approved guidelines for drawing arrangements between banks operating in Bangladesh and exchange houses abroad.

A drawing arrangement is the agreement between a local or foreign bank operating in Bangladesh and the exchange house abroad to remit money through the bank and it must be approved by the Bangladesh Bank.

Under the guidelines, exchange houses are not allowed to appoint sub-agents to collect remittances, said a central bank official.

The BB took the decision as the London-based First Solution Money Exchange company collected deposits through sub-agents for remittance to Bangladesh and cheated the remitters out of 1.7 million pound sterling.

An exchange house, however, is allowed to open branches and if it operates from more than one country, it must take permission from the BB to operate in all the countries concerned, the official said.

Directors of an exchange house can be foreign citizens or permanent residents and the company must be financially sound.

An exchange house operating in the USA should remit at least $3 million a year, in the UK 2 million pound sterling, Italy 2 million Euro, Canada $2.5 million, $3 million in any of the Middle East countries where concentration of Bangladeshi citizens is quite high and $1.5 million in Mid East countries with a lower concentration and any other country.

The houses are not allowed to make any promotional public statement like ‘approved by the BB’ and have to send all remittance statements to the local banks. Within 24 hours of the money deposited for remittance, the house must transfer the amount to the nostro account of a local bank. A nostro account is an account open by a bank in Bangladesh in foreign country.

Banks operating in Bangladesh will collect information and papers about an exchange house before approaching the Bangladesh Bank for its approval to do business with it.

The information or papers include copy of its licence, report from a reputed credit-rating agency, financial statements for the past three years, profile of its directors, articles and memorandum of association etc. Positive report from the Bangladesh embassy also has to be collected by the banks and submitted to the central bank for obtaining the drawing-arrangement approval.

The banks will not provide any lead time or overdrawn facility to the exchange house, the guidelines instructed.

Draft drawing instruments like demand drafts are riskier and that is why the central bank has fixed a security deposit of $50,000 in cash or in bank guarantee in non-resident dollar account. For non-resident taka account the required security amount is Tk 10 lakh for draft drawing.

Electronic fund transfer is less risky and the central bank has fixed $25,000 in NRDA and Tk 5 lakh in NRTA.

For procedural reason the exchange houses get overdrawn facility which may be risky for the local financial institutions. The central bank has fixed $50,000 in NRDA and taka equivalent to $25,000 in NRTA for instant cash system.