Expatriate Bangladeshis sent home $1.98 billion in December 2023, marking a 2.59-percent increase in remittance inflows compared to the previous month.
The inflow of remittance stood at $1.98 billion in December, which is the highest in a single month in the last six months of this fiscal, 2023-24.
It was $1.93 billion in November, according to the latest Bangladesh Bank (BB) data.
Besides, inward remittances also saw a 17.07 per cent hike in December year on year. The remittance earnings stood at $1.7 billion in December 2022.
In the recently concluded calendar year, Bangladesh received a total of $21.82 billion from January to December 2023 in remittance, reflecting a modest year-on-year rise of 2.54 per cent.
This marginal growth can be primarily attributed to the variance in the US dollar exchange rates between the formal and informal channels.
According to the data from the central bank, the remittance earnings stood at $21.28 billion in 2022.
In December of the preceding year, the state-owned commercial banks brought home $193.77 million in remittance, specialised banks contributed $66.23 million, private commercial banks accounted for $1.72 billion and foreign commercial banks sent $5.28 million.
Islami Bank Bangladesh PLC retained its top spot as the largest remittance collector, bringing in the highest amount of remittance sent home by migrant workers.
The bank fetched the highest $634.37 million in remittance in December last year, according to the BB data.
To attract remittances, the government introduced a 2.0 per cent incentive in 2019 and later raised it to 2.5 per cent. Now, the banks would provide up to 2.5 per cent from their own coffers.
This is in addition to the government's 2.5 per cent incentive.
Remittance is the cheapest source of US dollars for Bangladesh and is a key pillar of the economy.
The central bank in its quarterly report (July-September) identified the informal hundi channel as one of the major factors contributing to the recent fall in the country's remittance inflows.
"Despite the rise in migrant workers' number in Gulf and middle-east 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 said.
Dr. M Masrur Reaz, chairman of Policy Exchange Bangladesh, suggests that the increase in inward remittance could be partially attributed to the ongoing election campaign expenditures where expatriate Bangladeshis are supporting their family members contesting the national election.
Additionally, he points out that some banks are offering an extra 2.5 per cent incentive, which a perhaps factor is contributing to the rise in remittance.
The recent strengthening of the local currency by 50 paisa against the US dollar might have helped reduce speculative behaviour among some remitters prompting them to send remittances they may have been holding back in anticipation of further depreciation of taka, according to Dr. Reaz.
He anticipates this positive trend in remittance inflow to continue leading up to the fasting month of Ramadan and Eid-ul-Fitr.
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