Janata Exchange in Italy survives closure bid

A rethink on proposed shutdown of the perennially losing Janata Exchange Company in Italy saves the offshore entity amid fear of negative impacts on remitters and resultant governmental image crisis, officials said.
The Financial Institutions Division (FID) under the Ministry of Finance has conveyed this government decision to Janata Bank PLC, the parent organisation that counts unmerited losses, they added.
The Janata Bank management late last year sought finance ministry's directives regarding closure of Bangladesh's lone state-run payment institution in Europe because of suffering significant financial losses every year while, in a quirky contrast, the private-sector exchange houses have been making hefty profit.
Later, the FID sought opinion from the Bangladesh embassy in Italy before taking a decision on liquidating the burdensome Janata Exchange Company.
The embassy in a letter this March informed the FID that the exchange company was established in 2002 and Bangladeshi nationals living in Italy are sending remittances through two branches of the company in Rome and Milan.
Presently, the mission said, a number of private exchange companies are operating in Italy and they have been sending remittance much more than the Janata Exchange Company by collecting the money through agents.
It mentioned that a "time-bound business plan" was submitted to the central bank of Italy in 2022 for the launch of agent network in order to make Janata Exchange Company profitable.
Once approved, the exchange will be able to appoint agents in important Italian cities and will turn the corner for making profit gradually.
Janata Exchange Company is the lone payment facility of Bangladesh in European Union states. So, if it is closed, opening a new payment institution/exchange house in EU area will be tough for Bangladesh government to meet its immediate or long-term needs, the embassy opined.
Also, the mission argued that due to the presence of Janata Exchange Company the private-sector exchange houses are forced to pay a rational exchange rate to the remitters.
"The closure of Janata Exchange may lead to lower exchange rates and monopoly to be created by the private exchange houses … the non-resident Bangladeshis will be forced to send remittance at comparatively higher exchange rate or by illegal means," the embassy communication to the FID reads.
A spillover negative impact will be created among the non-resident Bangladeshis and hurt government's image, it adds.
Officials said that, in the letter sent to the Janata Bank, the FID also referred to the feared negative impact on remittance inflow into the country after possible closure of the Janata Exchange Company.
In August last year, the Bangladesh Bank asked the Janata Bank to close the Janata Exchange Company as it had been incurring financial losses for 13 consecutive years, which has been causing depletion of the bank's forex reserves.
To make up for the financial hemorrhages caused by the exchange company, its parent body, Janata Bank, spent some Tk 456.2 million from its own coffer between 2009 and 2020, data show.
Moreover, the Janata Exchange Company took Tk 113 million from its equity to cover loss expenses for the years 2021 and 202, officials said.

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