Remittances surge 22% in Dec's first 22 days
Bankers expect remittance inflows will exceed $2 billion by the end of this month
Remittance inflows surged around 22% year-on-year in the first 22 days of December, thanks to some flexibility in the dollar rate permitted by the Bangladesh Bank.
According to central bank data, banks received remittances of $1.57 billion in the first 22 days of this month, compared to $1.29 billion received in the corresponding period of December last year.
Bankers expect remittance inflows will exceed $2 billion by the end of December if the trend so far this month continues. They have attributed the hike in remittance inflow to favourable exchange rate – up to Tk122 for a dollar.
Syed Mahbubur Rahman, managing director at Mutual Trust Bank, told The Business Standard, "Banks are making efforts to increase the flow of dollars at the end of the year. They have taken several measures to enhance remittance flow. As a result, remittances have increased."
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According to senior officials at several banks, the current decision of the Association of Bankers, Bangladesh (ABB) and the Bangladesh Foreign Exchange Dealers Association (Bafeda) dictates that banks will pay a maximum dollar rate of Tk109.50 for collecting remittances. Additionally, banks can provide a 2.5% incentive from their own funds, allowing them to offer a maximum dollar rate of Tk112.24 for remittances.
However, many banks are not adhering to the dollar rate determined by the central bank through these two platforms of bank managing directors, as they are buying remittance dollars from exchange houses at a maximum rate of Tk122.
The managing director of a leading private bank said, in several incidents, the central bank has come to understand that remittance inflows decrease when banks are under too much pressure on the dollar rate of remittances.
Last September, the central bank fined the treasury heads of 10 banks Tk1 lakh each for offering higher dollar rates for remittances. As a result, remittance flows fell to $1.33 billion that month, indicating a reduction of about $600-700 million compared to the usual amount, he pointed out.
Even though the Bangladesh Bank has issued warnings to banks several times since that incident, it has now shown some flexibility.
However, the central bank is unusually flexible towards some Sharia-based banks. These banks are constantly engaging in various irregularities with the dollar rate, but the central bank remains silent, he added.
Bankers said several banks are receiving more dollars due to higher rates for remittances. Again, remittance income has decreased significantly for many banks that adhere to the rates fixed by Bafeda.
Central bank data showed that although the remittance flow was good in December, the total remittance inflow in the current financial year has decreased by about 4.19% year-on-year.
From July to 22 December of the current financial year, remittances have reached $9.66 billion, compared to over $10 billion that came in during the same period last fiscal year.
