Hundi eats up a big chunk of remittance

Chattogram division accounts for the highest number of workers migrating from Bangladesh but its annual remittance receipt counts almost half of Dhaka division's, giving some credence to suspected forex flight.
Such stark mismatch in the earning of foreign currencies through remittance gave rise to question about rigorous monitoring among sector-insiders and experts who fear active presence of illegal hundi operators in the supply chain.
According to the Bureau of Manpower Employment and Training (BMET), the outflow of workers from the Chattagram division was 411,386 in 2022 followed by Dhaka's 309,944, Sylhet-116689, Khulna-80334, Rajshahi-68863, Barishal-51754, and Mymensing-51552 and Rangpur 22,852.
The number of overseas jobs was also higher in Chittagong than that of Dhaka division in 2021. The data show some 232,149 workers went abroad from the Chittagong division and 192,840 from the Dhaka in 2021.
In terms of remittance inflow into the economy, Dhaka division contributed US$10.243 billion while Chattogram division recorded at $5.961 billion in the fiscal year (FY) 2022-23, according to the statistics of Bangladesh Bank (BB), the country's central bank.

The contributions of other regions were $2.47 billion from Sylhet, $738 million from Rajshahi, $924 million from Khulna, $523 million from Barisal, $346 million from Rangpur and $402 million from Mymensingh.

In the first seven months of the ongoing year, 228,614 workers from 11 districts-bloc of Chattogram division went abroad for employment while the number was 208,792 in Dhaka division having 13 districts. During this time, Dhaka's remittance contribution was $936 million while the volume from Chittagong was $580 million, the BMET data showed.
Md Mezbaul Haque, executive director and spokesperson for the central bank, told the FE that they had no such analysis that could identify the reason for the difference in division-wise remittance inflow.
"There can be several reasons such as differences in skills, the channel of sending money, and the regions in which they work," he added.
Seeking anonymity, another BB official described the lower remittance-earning scenario of Chattogram despite sending the highest number of workers as 'surprising'.
He feels that it should be taken seriously amid falling trend in the country's foreign-exchange reserves which dropped to $29.26 billion as on August 27, 2023 by official count.
Some other factors need to be assessed, too, like skills of the workers, their destinations and wage rate of the workers who went from Chattogram which could make the difference in earnings.
"Of course, the issue of hundi operations cannot be overlooked. We need to pay more attention to this, we really want to see some signs of improvement in forex reserves," says the central banker, adding that existing exchange-rate gains from unofficial market allured the remitters into choosing nonbank channel.
According to the BB data, the exchange rate for the greenback in the banking system is Tk 109 while it is over Tk 112 on kerb market.
Ovibashi Karmi Unnayan Program (OKUP), a migrant rights group, recently conducted a survey in Dhaka division that found about 96 per cent of international migrant workers from some areas of Dhaka sending remittances through banking channels because the government provides subsidies. Only 4.0 per cent of them send money through hundi because of the higher rate compared to that of banks.
About 71 per cent of them send money through banks and 25 per cent through BKash, it also found.
The survey was conducted on 218 families left behind by migrant workers in Manikganj, Faridpur, Munshiganj, Narsingdi and Narayanganj districts during January-June this year.
OKUP chairperson Shakirul Islam says they have seen less use of hundi in the Dhaka region. Similar surveys are required in other regions as well. The government needs to have information about this matter.
In Chattagram Division, labour migration usually takes place between family-and- friend networks. In that case, the use of hundi is likely to be more. "If they have little money, they can also send it to relatives and friends."
He adds: "I have heard that Bangladeshi businessmen in the Middle East (ME) are also taking money from the country through hundi."
The government needs to make a proper inquiry into this matter, and also increase incentives for the remitters, he suggests.
Seeking anonymity, top executive of a private commercial bank said there is a Chattagram-based big hundi operator who has been very active in conducting illegal money-transaction operations.
But the banker wouldn't name the hundi operator from the port city which most of Bangladesh's external trade pass through.
However, data available from the BMET showed Bangladesh sent a record 1.1 million workers abroad in 2022, including only 22.22 per cent skilled migrants.
However, migrant workers from the Chattagram division mostly work in the Middle-Eastern countries.
Talking to the FE, Ramizuddin, a resident of Cumilla, who had stayed in Oman for 10 years, said he always sent money through banking channels. But once, while buying a visa for his brother-in-law, he paid the expenses there and asked the brother-in-law to give the same amount to his family.
"In this way, I paid the equivalent of Tk 250,000 to the visa trader," he mentioned.
Sector-insiders said a significant amount of remittance cannot come to the country due to visa trading in the ME countries.
About 70 per cent of workers are sent to the ME nations "in the name of free visas". And workers need to spend Tk 400,000 to 500,000 to buy these visas, they added.
Bangladeshi workers remitted US$21.61 billion home in the FY 2022-23, $21.03 billion in 2021-22, $24.77 billion in 2020-21, and $ 18.20 billion in the FY 2019-20.
Contacted, executive director of Policy Research Institute (PRI) Ahsan H. Mansur said hundi is most likely behind the falling supply of remittance from Chattagram division.
"If the social behaviour of the people in Chattagram division is taken into consideration, you will find cohesiveness among them. If anyone of them gets involved in hundi operation, they will trust them and send money through them," he says.
He thinks the exchange rate-related issue will not solve it alone. "We need to stop factors like political and economic uncertainty, corruption and ensure the rule of law," he says.

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