In the initial 10 days of November, the country witnessed a substantial remittance inflow of $794.4 million, only to observe a decline to $698.54 million after 14 days. This downturn is attributed to the frequent changes in decisions by the Bangladesh Bank regarding remittance handling.
On October 31, the central bank consented to banks offering a higher rate to remitters for USD collection. This decision resulted in a boost in remittance inflow in the first 10 days of November. However, on November 8, the central bank reversed its decision, instructing banks to collect remittances at Tk116, leading to a reduction in inflow between November 11 and 24.
According to central bank data, the total inflow of remittance stood at $1.49 billion as of November 24. A senior official of a central bank, speaking on the condition of anonymity, expressed surprise at the unexpected drop in remittance after initially reaching $800 million in the first 10 days of November.
The official said, "Most of the banks are still not following the direction of the central bank. Banks are collecting remittances at rates higher than the fixed rate, causing inflation. Some banks are not being fined as their management can handle the regulator."
A head of treasury from a bank, also anonymous, highlighted the volatility of remittance rates, stating, "Several banks are offering Tk122-124, while others are offering Tk117-118. Those banks bringing in more remittances are providing higher rates."
Another senior official from the central bank pointed out that the decisions of the central bank, the Association of Bankers, Bangladesh (ABB), and the Bangladesh Foreign Exchange Dealers Association (BAFEDA) have confused banks.
ABB-BAFEDA initially directed banks on October 21 to offer an extra 2.5 per cent incentive from their funds, in addition to the government's 2.5 per cent incentive.
Subsequently, the decision was revised, allowing banks to offer incentives to any percentage before approval from their board. This led to banks adopting varying approaches for remitters from November 1, with some offering Tk 124 per USD and witnessing an increase in remittance inflow in the first ten days.
However, ABB-BAFEDA later directed that banks should not offer more than Tk 116 to remitters, resulting in a subsequent decline in remittance inflow.
Treasury heads of several banks said the inflow of remittance had increased in the first 10 days because banks started offering in their own way. It was a good decision at that time. After that, ABB-BAFEDA directed us that we can offer remitters not more than Tk 116 per USD.
In the period between November 11 and 17, the country received $393.30 million in remittance, reflecting the impact of ABB-BAFEDA's fixed rate not exceeding Tk 116.
Another treasury head of a bank mentioned that the central bank had fined treasury heads, but the managing directors of the banks did not provide clear guidance on how to proceed. They were directed to collect remittance at any cost.
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh (PRI), emphasised the need for stability in the market, attributing the volatile situation to the decisions of ABB-BAFEDA. "The situation has become volatile because of ABB-BAFEDA decisions. The market needs to be stabilised,” he said.
