Rate on white collar remittance increased by Tk7.5 to Tk107
From today, exchange houses will not charge any fee on remittance and will also operate during holidays
To increase remittance flow, the remittance rate of white collar job holders will be increased by Tk7.50 to Tk107 from now on, while wage earners' remittance rate has been reduced by 50 paisa to Tk107.
The decision was taken in the meeting of top officials of the Association of Bankers, Bangladesh (ABB) and the Bangladesh Foreign Exchange Dealers' Association (BAFEDA) at the Sonali Bank head office on Sunday evening.
The decision comes into effect from today.
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Earlier, the remittance rate for white collar job holders was per the import earning encashment rate of Tk99.50.
White-collar workers are often found in office settings and earn a salary through the banking channel.
The ABB and Bafeda held a meeting with the central bank on 31 October, where the policy decision regarding the white collar job holders' remittance rate was discussed.
Apart from the rate, it was also decided that exchange houses will be kept open even on holidays.
Meanwhile, in the meeting, the settlement of export earnings was increased by 50 paisa to Tk100.
Usually, the exchange houses of domestic banks used to accept expatriate remittances.
Fees for remittance in Europe, the US and Middle East range from $1 to a maximum of $5.
Of the remittance that comes to Bangladesh, only 10% comes through domestic exchange houses.
At the meeting, Bafeda Chairman and Sonali Bank MD Afzal Karim said, the special decision is that expatriate workers do not have to take any leave from the workplace to send remittances, so remittance houses will remain open even on holidays.
He also said banks may not charge a fee at any end of the transaction. But foreign exchange houses will decide on their own fees.
According to meeting sources, several bankers said that 4/5 banks are not able to pay the promised (dollar) payments to other banks.
Some banks defaulted as early as October, with more payment pressure in November. It also expressed fear that the banks may have more problems.
The central bank empowered the ABB and Bafeda to take effective measures to keep the foreign exchange market stable.
On 11 September, a single dollar rate of maximum Tk108 was fixed for all banks to bring in remittances.
Later, the remittance rate was lowered to Tk107 per dollar and export earnings encashment rate was set at Tk99.50 per dollar.
In the very first month following the decision by Bafeda, the remittance inflow went down. Remittances in September were about $497 million lower than in August.
That downward trend continued in October when $1.52 billion in remittance came in, the lowest in nearly eight months.
An ABB official, requesting anonymity, said, "The rates are much higher in informal channels than in formal channels, due to which remittance inflow is low. It is an imposed rate and rates cannot be imposed like this."
This is the main reason why remitters are opting for informal Hundi channels to send money home, said the official.
"If the rate is kept like this, the remittance inflow will never increase. If the central bank continues to experiment on this, it will be very difficult to save the banks," added the official.
Zahid Hussain, former lead economist of World Bank's Dhaka office, told The Business Standard, "The decline in remittance inflow is a matter of concern amid the forex reserve crisis. Multiple forex rates in one market is by no means desirable.
"Expatriates are getting Tk5 more per dollar using Hundi than the banking channel. Now the central bank should fix the remittance rate in coordination with the kerb market to increase the flow of remittance," he added.
