Bangladesh’s inward remittances increased through legal channels as the banks are providing additional incentives to attract remittances.
However, the expatriates sent inward remittances of $1.97 billion in October through banking channels. The amount is the highest in the last three months.
According to the data of the Bangladesh Bank (BB), the banking channel received $1.97 billion in inward remittances in October.
Md Mezbaul Haque BB spokesperson said that inward remittances flow increased for time befitting initiative of the central bank.
He said the central bank instructed banks to provide additional incentives from their financial sources, which plays a role in increasing the flow of inward remittances in the legal channel.
With the government's 2.5 percent incentive on expatriate income, banks can buy dollars at an additional 2.5 percent higher price. A total of 5 percent is getting incentives. As a result, remittances are coming to the country through legal channels.
Read: Further blow to remittances as September rakes in 41-month low
Executive director of the private research institute South Asian Network on Economic Modeling (SANEM) Prof Dr. Salim Raihan said that the long-term benefits of remittance incentives will not come.
He said that the government would give an additional two and a half percent to the dollar rate. A total of 5 percent incentive on remittances such a move will boost remittances temporarily. But there will be no long-term solution.
Read: Experts’ opinions sought to know causes of falling remittances despite rising manpower export
Dr. Raihan said,” To increase remittances, hundi should be stopped. If you want to stop hundi, you have to stop money laundering. Now a lot of money is being smuggled abroad. It has to be controlled by any means.”
He said that more incentives the banks give, the people invlvoing hundi business will give more incentives.
"So as long as the hundi remains rampant, the expected remittances will not come through legal channels."
Read more: August remittances slide to 6-month low clocking $1.6 billion