Higher incentives push Oct remittance four-month high at $1.98b
Staff Reporter :
Bangladesh received $1.98 billion in inward remittances in October, the highest in four months due to increase in dollar rate and increase in incentives, according to Bangladesh Bank (BB) data released yesterday.
Expatriates sent $643 million more remittances in October this year compared to September, at a growth rate of 48.20 percent. Remittances stood at $1.33 billion in September, which was the lowest in the last 41 months.
Besides, remittance inflow was also up by nearly 30 percent from the receipts in the same month last year.
Earlier in October 2022, Bangladesh received $1.59 billion in remittance.
Experts said expatriates send remittances only through the channels where remittance rates are higher.
As expatriates fetch higher prices in the hundi market, remittances came in less through the banking channel.
The remittance incentive has been increased from 2.5 percent to 5percent at the end of this month due to which the inflow of the same has risen at the same time, they added.
An official of a private bank informed that the treasuries of some banks were fined due to overpricing of the dollar.
However, the central bank has verbally asked some banks to bring remittances at a higher rate due to lower remittances, so the remittance has increased.
In the first four months (July-October) of the current financial year 2023-24, Bangladesh received $6.88 billion in remittances.
It is 4.36 percent lower than the amount received ($7.19 billion) in the same period of the previous fiscal year.
Out of the total remittance flow in October, state-owned commercial banks received $ 154.47 million while $ 58.20 million dollars had come through the specialized banks.
Besides, local private banks and foreign private banks have received $1.758 billion and $ 6.03 million respectively.
However, in October no expatriate income came through seven banks.
These include the state-owned Bangladesh Development Bank (BDBL), specialized Rajshahi Agricultural Development Bank (RAKAB), private banks include Citizens Bank PLC. , Community Bank, and Foreign banks – Habib Bank, National Bank of Pakistan and State Bank of India, as per BB data.
Meanwhile, in a latest move on October 31, the Association of Bankers Bangladesh (ABB) and the Bangladesh Foreign Exchange Dealers Association (Bafeda) have removed the 2.5 percent limit on incentives that banks can offer on remittance income.
Banks are now free to set their own incentive rates for remittances. However, each bank’s board of directors must approve the incentive rate before it can be implemented.
This change means that banks can now offer more competitive rates on remittances, which could encourage more people to send money home through banks.
This could have a positive impact on the Bangladesh economy by increasing the inflow of foreign currency.
Besides, remitters will get 2.5 percent government incentive as per previous rules.
