Vital role of NGOs in channelising foreign remittance to rural Bangladesh

Remittance is one of the most important economic indicators in Bangladesh for maintaining balance of payments, foreign exchange reserve, national savings and velocity of money. Remittance earning is increasing day by day and is the second largest sector of foreign exchange earnings after garments sector. Bangladesh has experienced a robust growth in remittances in recent years due to acceleration of good demand of blue-collar jobs in Gulf countries reducing poverty level by about 6% in our country as stated by World Bank. In order to facilitate distribution of foreign remittance to the remote areas of Bangladesh, ASA NGO has expanded its network by adding an additional 1000 branches nationwide that works in collaboration with private commercial banks. For this, ASA arranged a training program for its Assistant Branch Managers (ABM) conduced by National Bank Ltd. from 27-29, September, 2011. ABMs have now the requisite training to efficiently appoint and operate Western Union Point of Sale (WUPOS) in their respective areas. To facilitate smooth flow of remittance to people in rural areas, banks have tied up with national NGOs. such as- National Bank Ltd. with ASA NGO, NCC Bank Ltd. with TMSS and BRAC Bank Ltd. with BRAC NGO. These partnership arrangements will ensure secure remittance and faster money transfer, money withdrawal from any agent. All activities of NGOs will comply with the rules of anti-money laundering act. The foreign expatriates holding white collar jobs seldom remit their income to their own country. Their earnings are generally spent in foreign countries by purchasing cars, houses and in business. On the other hand, blue color job holders' remit their hard-earned foreign exchange to their own country through informal channels (Hundi) or banking channel. The bulk of such remittance comes from countries in the Middle East such as Saudi Arabia, UAE, Kuwait and some Asian countries like Malaysia contribute sizable foreign exchange repatriation. About 70% remittance comes from gulf countries. Since remittances from the unskilled expatriate workforce are significant, increase in Bangladesh's foreign exchange reserve is somewhat dependent on its inflow. There are two channels used to send remittance to Bangladesh. One is formal channel: demand draft, traveler's check, telegraphic transfer, direct transfer, ATM etc. The other is informal system (Hundi). Hundi refers to the illegal money exchange not supported by the international or national legal structure and anti-money laundering act. The system is popular since Hundi operators offer an exchange rate that is consistently one to two per cent higher than the official exchange rate prevalent in the country. Additionally, Hundi operators generally maintain the confidentiality of payee of the money and have the ability to reach the money to any nook and corner of the country. By making the formal sector stronger, quicker, secure, efficient, less costlier than the informal sector, private commercial banks in collaboration with NGOs can play a vital role to reach the hard-earned remittance anywhere in Bangladesh. This would on the one hand help make legal all such transactions and also help beef up foreign exchange reserves of the country. The writer, Dr. Md. Azadur Rahman Khan, may be reached at e-mail : azad_dec@yahoo.com