Remittance sinks to 16-month low

Remittance flow to Bangladesh fell to a 16-month low of $1.72 billion in September as money transfers through informal channels such as hundi might have made a comeback after a lull caused by the coronavirus pandemic.

The receipts were down 19.74 per cent year-on-year and 5 per cent from a month ago, data from the Bangladesh Bank showed.

The remittance earnings were the lowest since May 2020. Since then, the monthly inflow ranged between $1.83 billion and $1.78 billion until August this year.

Officials of the BB and commercial banks blamed the easing of coronavirus restrictions on movement in recent months across the globe for the decline in remittance to Bangladesh.

As people's movement resumed, the global hundi cartel, which operates an illegal cross-boundary financial system, has become active again.

The unofficial route had faced a major disruption since the first quarter of 2020 as international travels came to a halt because of the pandemic, fueling the growth of remittance through official channels.

Many nations, including the countries where most expatriate Bangladeshis work, enforced strict restrictions on the movement to contain the spread of the virus.

Remittance, which plays a major role in strengthening the country's foreign exchange reserves, fell 19.4 per cent year-on-year to $5.40 billion in the first quarter of the current fiscal year.

Reserves stood at $46.21 billion in September, up 18 per cent from a year ago.

Trade-based money laundering might have increased along with the activation of the hundi cartel, bringing a negative effect for remittance, said Syed Mahbubur Rahman, managing director of Mutual Trust Bank.

"Imports have increased in recent months. On top of that, the global hundi outlets might have opened once again," he said, adding that manpower export should be increased to ensure sustainable growth in remittances.

Emranul Huq, managing director of Dhaka Bank, said that many expatriates had returned due to economic hardship.

"They are now facing problems in going back," he said, adding that sending workers abroad was yet to gain momentum.

"So, remittance flow has continued sliding in the last couple of months."

A central banker says the foreign currency reserves might decline in the coming days if remittance kept falling.

Remittance posted 36 per cent year-on-year growth last fiscal year, the sharpest in 30 years. Expatriates sent home $24.78 billion in 2020-21 compared to $18.2 billion a year ago.