Extended Eid holidays may reduce remittance inflows, expatriates turn to unofficial channels

The ten-day bank closure for Eid-ul-Adha holidays has caused serious inconvenience for many Bangladeshi expatriates trying to send money home, forcing many to rely on informal methods such as hundi as the prolonged holiday disrupted the formal remittance channel.

Siam (pseudonym), a Bangladeshi expatriate living in the UK, recently needed to send money urgently to his brother after Eid. However, when he visited leading money transfer agents like MoneyGram and Western Union, he was told that due to the 10-day bank closure for Eid, his remittance wouldn't be credited to the recipient's account until the following Sunday.

Left with no other option, Siam, who settle in the UK after finishing his studies, turned to hundi, the informal and illegal remittance channel he had previously avoided despite better exchange rates.

Speaking to The Business Standard, Siam said, "I needed to send money for my brother's wedding. Although I've never used hundi before, with the banks closed, I had no alternative."

Siam's experience isn't isolated. Many Bangladeshi expatriates have been unable to send remittances via official channels during the long Eid closure.

Bankers warn that this could significantly impact June's remittance figures. They are also now considering ways to ensure uninterrupted remittance inflow during extended holidays in the future.

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, said, "Even during holidays, customers can technically send remittances, but the funds remain parked in nostro accounts. Since banks are closed, we can't transfer the money to the beneficiary accounts until after reopening."

He added that although remittance inflow generally slows down after Eid, the extended bank holiday will worsen the dip. "In long breaks like this, it's natural for hundi transactions to rise, especially when people face urgent needs. That's why we're considering ways to maintain service continuity during such extended closures."

This isn't the first time remittance inflow has taken a hit due to long holidays. During Eid-ul-Fitr earlier this year, banks were officially closed for five days. But with weekends and Independence Day added in, they operated for only two days between 26 March and 5 April.

Remittance data from the past six months shows that weekly inflow, which typically ranges from $600 to $700 million, dropped drastically. Between 30 March and 5 April, only $155 million came in, nearly $450–500 million less than a typical week.

A managing director of a private bank estimated that the 10-day closure during Eid-ul-Adha could reduce June's remittance by at least $500 million.

In addition, regular banking activities such as opening import LCs are also being disrupted, said the senior official.

Businesses that typically handle large cash flows are reportedly holding on to their money as they are unable to deposit it in banks. Many have expressed concerns about keeping large amounts of cash on hand, citing the overall law and order situation, the MD added.

Bangladesh saw a historic surge in remittance inflow in recent months.

In May, the country received $2.97 billion, the second highest in its history. This followed a record-breaking $3.29 billion remittance inflow in March, driven by stable exchange rates and Eid-ul-Fitr spending.

According to Bangladesh Bank, remittance in May rose 31.7% year-on-year, from $2.25 billion in May 2024.

From July to May in FY25, Bangladesh received $27.51 billion in remittances, 28.7% higher than the $21.37 billion received during the same period in FY24.

However, experts now warn that the momentum could slow in June due to the current disruption.