In the month of October, expatriate Bangladeshis sent remittances of 198 million dollars to the country through banking channels. This figure is the highest in the last four months. By doing this, the dollar crisis will be eliminated and the reserves of Bangladesh Bank will increase. Remittance flows rose in October amid dollar crisis. Bankers said the inflow of remittances has increased due to the increase in dollar exchange rate and incentives in remittances. Expatriates sent $643 million more remittances in October than in September, a 48.2 percent increase over the previous month, central bank data said.
Remittances in September were $1.33 billion, the lowest in 41 months. Earlier in October 2022, expatriate remittances were $1.59 billion. A senior official of the central bank said that expatriates send remittances through the channels that get the highest rate of remittances (in dollars). Earlier, remittances through the banking channel were low as expatriates found the value of the dollar higher in the Hundi market. The increase in remittance incentives from 2.5 percent to 5 percent at the end of last month has led to higher remittances.
Those related to the sector say that the banks are able to buy dollars at a higher price to overcome the foreign exchange crisis. With the government’s 2.5 percent incentive on expatriate income, banks are able to buy dollars at an additional 2.5 percent higher price. A total of 5 percent is getting incentives. As a result, the lateness is coming to the country in a legitimate way. Due to which the remittance flow increased slightly. However, incentives on remittances will not bring long-term benefits. In addition, the Middle East country Oman has given a visa policy saying that it will not take workers from Bangladesh. Such visas may not come from some countries due to several reasons including political crisis. As a result, there is a fear that this trend of expatriate income will not continue in the future.
According to the data of the Central Bank, remittances to the country reached 1977.6 million US dollars in October. Out of this, 154.5 million dollars came through state-owned banks, 58.2 million dollars through a specialized bank, 175.88 million dollars through private banks and 6 million dollars through foreign banks. Economists say, to increase remittances, handi should be stopped. And if you want to stop hundi, you have to stop money laundering. Now a lot of money is being smuggled abroad it has to be controlled by any means. According to them, the more incentives the banks give, the more incentives the Hundi people will give. So as long as the hundi is rampant, the expected remittances will not come through legal channels.
Meanwhile, the remittance flow decreased continuously in the first three months of the current financial year 2023-24. Expatriate income suffered a major setback last September due to the dollar crisis. In that month, the lowest expatriate income in the last 3 and a half years or 41 months came to Bangladesh, amounting to 1.34 billion dollars. Earlier, in April 2020, $109 million remittances came. In the first month of the fiscal year 2023-24, remittances in July were 197 crore 31 lakh 50 thousand US dollars and in August remittances were 159 crore 94 lakh 50 thousand US dollars. The dollar-crisis in the country has become evident since March last year after the start of the Russia-Ukraine war.
To deal with this crisis, Bangladesh Bank fixed the dollar price at the beginning. This increases the crisis. Later last September, Bangladesh Bank withdrew from the responsibility of determining the price of the dollar. This responsibility is given to ABB and Buffeta. Since then the two organizations have been jointly fixing the dollar price for export and repatriation earnings and payment of import liabilities. Basically, these two organizations are implementing the decision of Bangladesh Bank. Currently remittances and export earnings have been revalued by 50 paisa to the dollar. From November 1, banks will buy 110 taka 50 paise per dollar from remittances and exporters and sell them to importers at 111 taka. The highest rate of dollar in interbank will be 114 taka. It was decided to buy dollars at 110 taka and sell them at a maximum of 110 taka 50 paisa.