Expatriate Bangladeshis in Malaysia, the fifth highest source of remittance for the country, would soon be able to send in money to their near and dear ones at home on a real time basis thanks to a novel arrangement between Malaysian fintech firm Valyou, British bank Standard Chartered and local mobile financial service platform bKash.
As per the arrangement, the terms of which has not been hammered out yet, remitters will be able to send in their hard-earned money in real time by opening a mobile wallet with Valyou, a subsidiary of Telenor Group.
The amount from Valyou would then be wired through Standard Chartered's operations in Malaysia and Bangladesh. Once in Bangladesh, bKash would distribute the funds, ending the chain of cross-border transaction that harnesses the power of technology.
This means migrant workers in Malaysia would be able to settle their cross-boundary transactions in real time with just a few clicks on their mobile phone, in an arrangement not seen before in Bangladesh.
In fiscal 2018-19, the country received $1.19 billion in remittance from Malaysia, which is 7.25 per cent of the amount that migrant workers sent home that year. The amount is an increase of 8.16 percent year-on-year, according to data from the central bank.
Thanks to this arrangement, remitters will feel comfortable about sending in money through the formal channel and shy away from the illegal digital hundi system, said a Bangladesh Bank official requesting anonymity.
Standard Chartered has managed approval from the central bank on December 19 last year to run the service, he said, adding that the lender has been asked to roll out the service within six months of the approval date.
The Daily Star has obtained a copy of the BB approval letter.
Expatriate Bangladeshis would be allowed to send any amount of money to their near and dear ones of the country through this arrangement, said Azmal Huda, chief product and technology officer of bKash.
Clients, however, are permitted to remit a maximum of Tk 150,000 per transaction in the form of foreign currency as per the central bank directive, he said.
The service will be introduced within a month or two and the whole transaction channel is highly transparent, Huda said, adding that agreement for the novel cross-border transaction arrangement was signed with the British bank in the third quarter of 2019.
As per the central bank's approval letter provided to Standard Chartered Bangladesh, the lender will have to distribute the remittance by using bKash's platform round-the-clock.
Distributed ledger technology, which is a digital system for recording transactions, will have to be used to implement the service.
The whole transaction system will be highly convenient for remitters and the transaction will be settled through banks, said Kamal Quadir, chief executive officer of bKash.
This will also give a boost to the country's remittance, he said.
"We will offer the same service for expatriate Bangladeshis living in other countries if bKash gets strong partners to implement the model," he said.
Standard Chartered could not be reached for comment.
Remittance stood at $16.41 billion last fiscal year, up 9.59 per cent year-on-year.