Bangladesh is rightly celebrated as one of the world’s largest recipients of remittances, with inflows projected to exceed $30 billion by 2025.
These transfers sustain household consumption and underpin foreign exchange reserves.
Yet, a vast share of outward transactions continues to bypass formal banking, strengthening the grip of the Hundi system and eroding the benefits that should accrue to the economy.
The paradox is stark. According to a report published in The New Nation on Saturday, while remittances pour in, only $211 million in outward transfers were recorded officially in 2023, against market estimates of $5–7 billion.
The difference reflects the reality that restrictive regulations have created a thriving informal market.
Hundi operators simply net off inflows and outflows, depriving banks of billions in foreign exchange and leaving policymakers with incomplete data to manage monetary stability. The demand for legitimate outbound payments is undeniable.
From SMEs importing essential goods to IT firms paying for cloud services, from families funding overseas education and healthcare to citizens travelling for tourism or religious obligations, the appetite for cross-border transactions is rising sharply.
These are not frivolous leaks of capital; they are part of the natural two-way flow of a globalised economy.
The costs of neglect are heavy. By forcing businesses and households into informal channels, the authorities not only weaken transparency but also intensify exchange rate volatility.
Economists warn that Bangladesh is “losing twice” – formal inflows are reduced while currency pressures mount. Without reform, remittances may stagnate, leaving reserves vulnerable.
The remedy lies not in greater restriction, but in controlled liberalisation. Simplifying procedures for tuition, healthcare, trade and travel; introducing digital KYC systems; ensuring transparency in fees and exchange rates; and expanding fintech-based transfer platforms could all shift demand back into formal channels.
Lessons abound from neighbours: India’s Liberalised Remittance Scheme and Thailand’s gradual relaxation of outbound payments both demonstrate that smart liberalisation reduces reliance on informal markets.
Bangladesh stands at a crossroads. If it clings to rigid controls, Hundi will continue to dominate, undermining both growth and stability. If it embraces reform, remittance inflows could rise by as much as 50 per cent, strengthening reserves and bolstering confidence.
The choice is clear: trust citizens with legitimate access to their own money, or allow the informal market to dictate the terms of the nation’s financial future.
