Tk 1,530cr cash subsidy for remitters

The finance ministry has released Tk 1,530 crore in cash subsidies for remitters for the first two quarters of the current fiscal year as part of a government move to encourage remittance through official channels.

It has instructed the Controller General of Accounts (CGA) to release Tk 765 crore for the July-September quarter and the same amount for the October-December quarter in favour of the central bank, according to a letter of the finance ministry issued on Monday. 

In June this year, Finance Minister AHM Mustafa Kamal introduced a 2 percent cash subsidy for remitters to encourage them to send money home through legal channels and mitigate the burden of increased expenses in sending their hard-earned money to their beneficiaries back home.

He set aside Tk 3,060 crore for the purpose for the fiscal year. According to the central bank, for amounts of up to $1,500 per transaction, expatriates will receive 2 percent cash incentive directly to their accounts without any verification.

For amounts above $1,500 per transaction, sources of income, passport details and other documents will have to be presented.

The office of the CGA will deposit the money against claims in the accounts of scheduled banks kept with the central bank’s Motijheel office. 

Yesterday, Kamal said the cash incentive has been introduced to earn more through remittance and accelerate their flow via legal channels. 

Although the beneficiaries of the remitters were supposed to receive the incentive from July 1 this year, the development of a system in order to roll out the scheme was delayed.   

However, the beneficiaries who received the remittances between July and September would be reimbursed. 

“I would like to assure the remitters and the recipients that they would not lose the money and they would get it,” Kamal said.

He said the agencies that mobilise remittances throughout the world have been asked to implement the scheme without any delay. 

The finance minister said the scheme was helping the country fetch more remittance. 

The flow of remittance rose 16.54 percent year-on-year to $4.51 billion in the first quarter of the fiscal year.

“Previously, it took six months for us to receive the same amount of remittance. This is a good side,” the finance minister said. 

The inflows in August were $1.44 billion, which climbed up to $1.47 billion the following month – up 28.95 percent year-on-year, according to data from the Bangladesh Bank.

The minister said at the current pace, Bangladesh will be able to fetch up to $18 billion to $20 billion in remittance in the current fiscal year. 

The upward trend in remittance will give some breathing space to the government in defending the exchange rate.

The exchange rate of the taka against the US dollar is also favourable for remitters: on September 30, the inter-bank exchange rate was Tk 84.50 per US dollar, up from Tk 83.75 a year earlier.

Remittance hit an all-time high of $16.40 billion in fiscal 2018-19. The inflows were 9.47 percent higher than in fiscal 2017-18, according to data from the central bank.