Remittance increased about 5 percent year-on-year to $1.48 billion in August due to a recent government move to extend incentives to expatriates for sending money home through the legal channel.
Last month’s inflows though are 6.92 percent lower than July’s receipts, according to data from Bangladesh Bank.
The country celebrated Eid-ul-Azha, one of the largest religious festivals in the Muslim-majority nation, on August 12, so July’s receipts were higher, said a BB official.
“Remittance inflows dropping in the following days after Eid is a regular phenomenon,” he added.
In the current budget, the government introduced a 2 percent cash subsidy for remitters to encourage them to send money home through the legal channel. As per the central bank notice, for amounts of up to $1,500 expatriates will receive 2 percent incentive directly to their accounts without any verification.
In case of remittance of more than $1,500, sources of income and other documents will have to be presented to avoid misuse of fund.
Remittance will get more momentum in the months ahead because of the latest initiative, which will help the government to mitigate crisis derived from balance of payments, the central banker said.
The exchange rate of taka against the US dollar is also favourable for remitters, which has encouraged them to send their hard-earned money through the banking channel, said Syed Mahbubur Rahman, chairman of the Association of Bankers, Bangladesh, a platform of the managing directors of private banks.
On September 1, the interbank exchange rate was Tk 84.50 for a dollar, up from Tk 83.75 a year earlier. Many banks have been running awareness programmes abroad to give a boost to their foreign exchange reserves on the back of their greenback shortage, said Rahman, also the managing director of Dhaka Bank.
At the same time, the central bank has strengthened its surveillance on hundi, the illegal outlet that many turn to for moving funds cross-border, he added.