AN English daily reported that the inward remittance has sharply dropped for the second consecutive month in August. It is a contradiction to the usual trend. Banking sector experts suspect that the inflow of remittance through illegal hundi channel has marked a sudden rise because of the lower rate of dollar against taka in the formal banking channel. The drop of remittance inflow in the face of reduced opportunities for Bangladeshi expatriates in many employers’ countries may be counter productive and cause a drastic setback to the economy.
Available data showed that the inflow of remittances in August (2016) declined to $1.183 billion from $1.195 billion in the same month a year ago. The monthly inward remittance in July (2016) also posted a disappointing amount of $1.005 billion, the lowest in five years. The country’s inward remittance has decreased by 2.55 percent year-on-year basis, dropping below $15 billion in the fiscal year 2015-16. The remittance inflow in FY16 decreased to $14.92 billion from $15.31 billion in FY15.
A leading banker opined that this declining trend in inward remittance in August ahead of Eid-ul-Azha is not normal. It seems that remittance is now entering into the country through illegal channels like “hundi”. It is alleged that the relatives of expatriate Bangladeshis receive the remittance through hundi sitting at home and it has been continuing for a long time. Hundi system is mainly run on micro level across the country and is mainly operated by the Indians based in the countries where Bangladeshis work. It is now doubted that some local big traders are also involved in the process.
The banks are now having excess dollar due to lower import payments against higher export earnings. For this reason, the banks could not offer a satisfactory exchange rate for the greenbacks to their clients against their remittances.
The relatives of Bangladeshi expatriates are rather interested in receiving the money through hundi to enjoy a higher exchange rate for the dollar than that the banks offer. By all counts, Hundi put a huge negative impact on the foreign exchange markets. The country is just deprived of the greenbacks due to this illegal money business.
Notably, the inward remittance from the UK has recently declined ax fall-outs of Brexit. The global oil price slump is another reason for the downward trend in remittance inflow, as the lion’s share of Bangladesh’s remittance earnings comes from the Middle East countries who are now cash-starved caused by downward oil price movement. Moreover, Bangladesh has also been facing manpower export crisis over the last few years due to global economic push-pull factors.
In our view, the government should provide cash incentives to the expatriates to send remittance through legal channel. It should also strong-handedly control the ‘hundi’ network and the businessmen should be brought under legal scanning. Fall in inward forex remittance flow is a real threat to the economy and cannot be taken lightly.
