BB asks banks to cut remittance costs

Bangladesh Bank (BB) yesterday instructed banks to take measures to reduce the time and cost of transferring remittances, as about 40 percent of remittances flow in from abroad through informal channels, locally known as hundi.
BB Governor Salehuddin Ahmed held a meeting with representatives from the ministries of finance, foreign affairs and expatriates welfare and eight banks.
The meeting, held at the central bank, was meant to find ways to increase remittance inflows in the face of the global economic crisis and direct the money through legal channels.
In a report placed at the meeting yesterday, the central bank focused on the remittances. In the last fiscal year, the remittance inflow was $7.9 billion, according to the report.
In the last five months of the current year, Bangladesh has received $3.75 billion in remittances, which means the monthly average inflow is $700 million.
The central bank said remittance inflows to Bangladesh did not fall yet, despite the world financial meltdown.
The meeting discussed four measures to increase remittance inflows: cutting down time and costs of transferring remittances, bringing remittances through legal channels, creating opportunities for investment of remitted money and welfare of expatriates.
The report mentioned that about 40 percent of remittances flowing into the country were through informal channels.
BB advised banks and exchange houses to be competitive and cut the costs of transferring remittances, especially in cases of small transactions.
Bankers said the costs of remitting funds have already come down and are expected to decline further.
The central bank asked the banks to create small instruments for small savers. The BB directed the bank branches or exchange houses overseas to keep their organisations open on holidays to help expatriates remit funds.
An official who attended the meeting said the BB governor had criticised the Ministry of Foreign Affairs for not providing "proper services" to Bangladeshis abroad.
The central bank governor said the expatriates keep the "wheels of our economy" running. He urged the foreign ministry to provide better services to the expatriates.
An official of the foreign ministry who was present at the meeting said: "There were such allegations in the past, but the ministry is now providing proper services to expatriates."