UK remittance inflow may lose pace

Bangladesh high commission to the UK has expressed concerns that remittance inflow from the fourth largest remitter may lose pace amid increasing job losses and financial meltdown in the lucrative European economic powerhouse.
The high commission also made a set of recommendations including suggestion for the Bangladeshi banks to consider setting up their own exchange houses in the UK.
In response to the UK mission's concerns, the Bangladesh Bank (BB) has recently directed all commercial banks to take cautionary measures in dealing with their exchange houses in Britain.
The central bank has asked the commercial banks to send to it the assessment of the balance sheet and credit report of their exchange houses in the UK after being audited by British auditing firms.
The banks will have to evaluate their transactions with the exchange houses and send report to the BB on a yearly basis, according to the central bank direction.
In last fiscal year $896.13 million remittance came from the UK, which was 11.33 percent of the total remittances. In fiscal year 2000-2001 the figure was $55.70 million or 2.95 percent of the total amount of the year.
In FY2007-08 remittance from Saudi Arabia was $2,324.23 million, from USA 1,380.08 million, from UAE $1,135.14 million, from Britain $896.13 million and from Kuwait was $863.73 million.
The Bangladesh mission in a recent letter to the central bank said: "The United Kingdom has emerged as the worst affected developed economy. With more than two million people out of employment and the Bank of England's warning that British economy is likely to shrink by 4 percent the forecast of gloom is now a certainty. The credit crunch has hit the economy hard."
The recession has hit when the British-Bangladeshi community was struggling to come out of debts and the "Curry Economy", the flagship industry of Bangladeshi community, was already suffering from stricter immigration regulations that are denying the restaurants the access to source chefs and workers from Bangladesh, the letter said.
"A new phenomenon has added to the anxiety of the remitters here. Sudden bankruptcy of the exchange houses/money transfer companies owned by and working among the British-Bangladeshi community members has rung the alarm bell," the letter added.
Top Solution Money Transfer Company and Rupali Exchange, private money transfer companies, were shut down in the last two months.
"This has created a trust deficit between the remitters and the exchange houses and likely to affect the confidence of the remitters in the existing system," the letter said.
There is a widespread speculation that out of some 60 money transfer companies/exchange houses working in the community, some are sick and may announce insolvency anytime soon.
The mission also recommended setting up an inter-bank remittance clearing house in Dhaka for quick transfer of money.
Both the public and private banks may come forward to open branches in the UK to net a sizeable portion of remittance.
"Telephone banking, maintenance of separate clients' account (by the money transfer/exchange companies), discouraging forward booking on the basis of the speculative higher exchange rates may be considered," the high commission suggested.