DHAKA FRIDAY JULY 7, 2023
ASHAR 23, 1430 BS
AKANDA MUHAMMAD JAHID
Islami Bank Bangladesh Ltd (IBBL) retained the top spot among the lenders bringing remittance to the country in the just-concluded fiscal year, data from the central bank showed.
Migrant workers sent home $21.61 billion in 2022-23 through 53 state-owned, private and foreign banks, up from 2.75 per cent a year earlier.
Of the total, 18.13 per cent of remittance came through state-owned commercial and specialised banks and 81.49 per cent via private commercial lenders.
Shariah-based IBBL channelled $4.71 billion in FY23, the highest among all banks, while state-run Agrani Bank came second by bringing in $1.32 billion.
Al-Arafah Islami Bank Ltd crossed the $1-billion mark for the first time in its history, when it comes to channeling remittance. Migrant workers transferred $1.03 billion through the bank, which placed it in the third position among the lenders.
Expatriates sent more than $800 million through the bank in FY2021-22, said an official of the bank.
“Our automated banking system, convenient service and agent banking operation with more than 1,000 service points across the country helped us hit the milestone.”
Dutch-Bangla Bank and Pubali Bank were in the fourth and fifth positions, channelling $0.98 billion and $0.97 billion, respectively.
City Bank’s receipts stood at $0.93 billion while Sonali Bank brought home $0.85 billion and Mutual Trust Bank channelled $0.83 billion. Some $0.78 billion came through Trust Bank and $0.68 billion via Janata Bank.
Beneficiaries of remittance in Bangladesh receive a 2.50 per cent cash incentive on top of the market-determined exchange rate for any amount of funds transferred.
In order to boost foreign currency inflows, the Bangladesh Bank has implemented measures to ease fund transfers through internet banking for remittances and removed restrictions.
The move is aimed at bringing more remittance through official channels as nearly half of the funds sent to Bangladesh by migrant workers are routed via illegal hundi operators since they offer better US dollar rates.
Usually, local beneficiaries receive a 3 to 5 per cent higher rate when remitters send funds through the illegal cross-border money transfer system.
Speaking to The Daily Star, Syed Mahbubur Rahman, managing director of Mutual Trust Bank Ltd, said, “As a bank, we are pushing for more remittance through the banking system.”
“As a part of this, we have partnered with financial technology companies, so the transfer of funds through official channels is going up.”
According to the government, more than 10.74 lakh migrant workers went abroad in FY23, the highest in a single year. In 2021-22, some 9.07 lakh Bangladeshis left the country in search of jobs in other countries.
At present, more than 1.49 crore Bangladeshi migrants are working in 176 countries, according to budget documents of the government.
Mutual Trust Bank’s Rahman said a sizable number of workers went abroad last year, which will positively impact remittance flow in the coming months.
However, the ongoing recession fears globally as well as higher inflation might have affected the remittance inflows, he said.
“In order to encourage remitters to increase the use of formal platforms, we can pursue both sending and receiving ends persistently.”
“Even, we can think of launching some products such as home loans for remitters,” he said, adding that various awareness-raising programmes should be rolled out for both expatriates and beneficiaries.
The noted banker also said a market-driven rate of the dollar should be ensured for a sustainable remittance flow.
According to a recent World Bank report, a wide gap in formal and informal exchange rates has been one of the factors behind the sharp fall in the foreign exchange reserves in Bangladesh as it shifts remittances from official channels to unofficial routes.
In Bangladesh, a one-per cent deviation between the formal and informal exchange rate shifts 3.6 per cent of remittances from the formal to the informal sector, it noted.