The Bangladesh Bank has identified the informal money transfer channels, known as hundi, as one of the major factors contributing to the recent fall in the country's remittance inflows.
"Despite the rise in the number of migrant workers in Gulf and Middle Eastern countries, the amount of remittance inflows decreased in the first quarter of the current fiscal year 2023-24 due to active informal channels/hundi," the central bank's quarterly report reads.
The country experienced a sharp decline in remittance inflows by 13.5 per cent to $4.91 billion in the first quarter of FY24 from $5.67 billion in the first quarter of FY23, because of a drastic fall in remittance from its major source countries apart from the UAE, UK and Oman, the Bangladesh Bank report said.
Md Mesbaul Haque, executive director and spokesperson for the Bangladesh Bank, said, "The BB has recently taken various initiatives to curb the hundi market with a view to increasing remittance inflow."
Haque mentioned the measures taken so far. Banks have been alerted, steps have been taken against money changers, awareness campaigns have been conducted, rates have been increased and some banks are offering a 2.5 per cent extra incentive as well.
These efforts appear to be bearing fruit, he said, pointing at rising remittance inflows in October and November.
Expatriates sent $643 million more remittances in October 2023 compared to September, a growth of 48.20 per cent. November saw a further increase, with inflows reaching $1,930.04 million, 21 per cent higher than the previous year's corresponding month, according to the central bank.
A country-by-country analysis reveals a 10.2 per cent fall in remittances from the Gulf region during the July-September quarter, which accounts for over half (51.9 per cent) of total inflows this quarter.
Within the Gulf region, Saudi Arabia, contributing roughly one-third (32.0 per cent), saw an 18.4 per cent drop in remittances in the first quarter of FY24. However, the UAE (32.5 per cent share) and Oman (9.0 per cent share) saw increases of 4.8 per cent and 34.0 per cent, respectively.
Inflows from the USA and Asia Pacific regions also declined significantly, by 48.8 per cent and 20.6 per cent, respectively, in the first quarter of the current fiscal year. However, remittances from the UK saw a substantial 15.8 per cent increase during the same period.
In the fiscal year 2022-23, the total inward remittance amounted to $21.61 billion, accounting for nearly 4.8 per cent of Bangladesh's gross domestic product.
While Bangladesh has seen an increase in the number of workers sent abroad in recent years, 80 per cent are classified as unskilled or semi-skilled.
According to the Bureau of Manpower, Employment and Training (BMET), the country sent 734,181 workers in 2018, 700,159 in 2019, 217,669 in 2020, 617,209 in 2021, and 1,135,873 in 2022.
The majority of these workers were concentrated in traditional markets like Saudi Arabia, Oman, the United Arab Emirates and Malaysia in the first nine months of this year.
BB statistics show Bangladeshi workers remitted $21.61 billion in FY 2022-23, compared to $21.03 billion in 2021-22, $24.77 billion in 2020-21 and $18.20 billion in FY 2019-20.
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