Govt raises cash incentive to 2.5% against remittance

The government has increased the cash incentive against remittance to 2.5 per cent from the existing 2 per cent to encourage the use of legal channels for sending money home.

The decision that came into effect on Saturday is expected to improve the overall living standards of ordinary people, boost foreign currency reserves, check money laundering and generate employment, said a finance ministry press release. This increase of cash incentives against remittance is a gift from Prime Minister Sheikh Hasina to the expatriate Bangladeshi workers marking the New Year. Finance Minister AHM Mustafa Kamal expected this decision to help achieve $26 billion remittance target within the 2022-23 fiscal year.

“We are trying to bring it to the right channel. We will discourage informal (illegal) channels. That is why the incentive has been increased,” he said at a virtual press briefing on Saturday.

Kamal claimed that during his time as planning minister, he had found that around 49 per cent remittance came through illegal channels. “To get remittance through legal channels, we declared 2 per cent incentive in FY 2019-20 and got good feedback,” he added.

In FY20, inbound remittance increased 13 per cent to $18.2 billion compared to the previous FY. The amount rose to $24.8 billion in FY21, which was 36 per cent higher than FY20.

The government said the incentives helped boost the remittance flow.

World Bank data published on July 13 last year showed that remittance increased 5.2 per cent in CY 2020 to all South Asian countries. It said many migrant workers lost their jobs during the pandemic. They brought their savings with them when they returned home. Those who failed to return due to travel bans sent their savings through legal channels.