Five districts--Dhaka, Chattogram, Cumilla, Sylhet and Brahmanbaria-- are the top recipients of remittance in Bangladesh as these districts receive over half of remittances sent by migrant workers every year.
According to the Bangladesh Bank data, Dhaka saw a steep decline in the inflow of remittances in the last three fiscal years while remitters from the district earn the highest greenback every year.
The data showed that Dhaka's remittance inflow declined 13.14 per cent to $6.9 billion in the fiscal year 2023 from $8 billion during the same period of FY2021. The share of remittances in total from Dhaka has increased even though remittance inflow has come down, according to the central bank data.
Except for Chattogram, remittances also declined in three other districts.
Chattogram received $1.39 billion in remittances in FY21 while the figure was $1.61 billion in FY23. Cumilla got $1.39 billion in remittances in FY21 while it was $1.28 billion in FY23.
Sylhet earned $1.37 billion in remittances in FY21 while it was $1.24 billion in FY23. Brahmanbaria received $787 million in remittances in FY21 while the figure was $645 million in FY23.
According to the Bureau of Manpower, Employment and Training (BMET), 34,387 workers went abroad from Dhaka in 2022 while 22,434 workers in 2021.
Insiders say that the decline in remittances will impact the country's economy. The key reason for the decrease in remittances from Dhaka is a gap between the exchange rates in the kerb market and the formal channel.
As per the rules of the Association of Bankers, Bangladesh (ABB) and Bangladesh Foreign Exchange Dealers Association (BAFEDA), banks can offer Tk 109.50 per $1, including a 2.5 per cent incentive to get around Tk 112 in the banking channel.
But remitters get Tk 118 in the kerb market against $1. There is a gap of Tk 6 between the kerb market and the formal channel.
Shariful Hasan, Head of Programme and Migration, BRAC, told The Business Post that remitters are now sending more remittances through hundi than the banking channel. “Hundi traders go to remitters’ houses abroad to collect remittances and send them to their family members in Bangladesh.”
This process is easier for them and migrants’ families get more money than the formal channel. On the other hand, the gap in the exchange rate between the formal channel and the kerb market is the key reason for the decline in the greenback.
A senior central bank executive seeking anonymity said, "Many freelancers are working from Bangladesh, and they are earning USD. But this amount of US dollar is not included in remittance."
On the other hand, remittances declined by 21 per cent to $1.59 billion in August 2023 compared to the same month last year. The drop in remittance dealt a blow to the country’s economy.
While talking to The Business Post, Mutual Trust Bank Managing Director and CEO Syed Mahbubur Rahman said, “It is very surprising that the remittance inflow has dropped suddenly.”
“The drop in remittance inflow indicates that a number of remitters send their money through hundi instead of the banking channel. Every month about 1 lakh people go abroad, but remittances come less than expected.”
