Photo : Collected
Remittance or expatriate income typically surges during the Eid festival compared to other times of the year. However, the scenario is different this time around. Even with Eid-ul-Fitr just four days away, the remittance inflow is not meeting expectations, which has raised concerns among central bank officials. In an effort to address this situation, Bangladesh Bank has instructed banks to purchase remittances at slightly higher rates.
A top central bank official, on condition of anonymity, told The Daily Messenger, “Recently, the demand for dollars has become somewhat normal. As a result, banks are no longer spending extra to buy remittances or dollars. That's why banks that used to spend up to Tk 120 to buy a dollar are now offering no more than Tk 110. Consequently, remittance inflows have decreased due to the drop in dollar prices.”
“Additionally, there are allegations that some banks have stopped the additional 2.5 percent incentive that they could offer along with the government's 2.5 percent. In this situation, the remittance flow that usually occurs before Eid every year is missing this time. That's why the governor has instructed all banks to be more generous in buying remittances,” he added.
When asked what he meant by being more generous, he said, “The governor has instructed them not to impose any restrictions on buying remittances so that expatriates send money through banking channels instead of hundi. Banks can buy remittances at any price. They will not face any fines or penalties for this.”
According to information received from Bangladesh Bank, the current year's Eid-ul-Fitr will be celebrated on April 10 or 11. Considering this, there are only 4 to 5 days left. However, in the first 5 days of April, remittance inflows have been only around $40 crore. Remittance also decreased in March. Throughout March, expatriates sent $199.68 crore as remittance, which is $17 crore less than the previous month of February.
A concerned official of Bangladesh Bank informed that in the 10 days before last year's Eid-ul-Fitr, nearly $110 crore came as remittance. In April 2023, when Eid was observed, the remittance inflow was $168 crore, most of which came before Eid. However, this time, the remittance flow before Eid is very low, which has worried officials. They need to meet the reserve condition to receive the third instalment of the IMF loan. In this context, such a low remittance inflow has made the central bank anxious.
When asked if they have received any message from the governor, the managing director of a leading private bank, on condition of anonymity, told The Daily Messenger, “The demand for dollars has decreased slightly. But the crisis has not fully subsided. More time is needed to overcome this crisis. As the demand has decreased, we had to reduce buying remittances. Apart from that, the central bank also creates problems if we buy dollars at excessively high prices. With the decreased demand for dollars, the additional incentive has also been stopped. For these reasons, the remittance flow has decreased. As a result, the central bank has encouraged us to buy remittances. We are now buying remittances at Tk 114.50.”
He added, “On the other hand, due to the contraction of import policy, the need for dollars has decreased to some extent. But we cannot continue like this forever. How long can we continue by contracting imports? The import of capital machinery has almost stopped. If no machines come, production will not increase. When production needs to be increased, machinery will have to be imported. Then dollars will be needed. Besides, there is also pressure from the IMF.”
When asked about this, Syed Mahbubur Rahman, Managing Director of Mutual Trust Bank, told Messenger, “As the demand for dollars decreased, we were buying remittances at Tk 110. After Bangladesh Bank's instruction, we have decided to buy at Tk 114.50. We hope this will increase remittance inflows again.”
Md Mezbaul Haque, Executive Director and spokesperson of Bangladesh Bank, told The Daily Messenger, “The demand for dollars will not decrease. However, the demand had eased a bit. At this stage, those banks that were buying at excessively high prices have stopped doing so. We don't need to send any instructions for that. But if the price drops suddenly, the flow of money being sent through hundi increases. That's why the central bank has given an instruction to all banks.”
Messenger/Fameema
