Remittance again crosses $2b mark in Nov
Despite the year-on-year increase, remittance inflows in November were 8.16% lower than the previous month, October.
In November, Bangladeshi expatriates sent $2.20 billion in remittances through banking channels, marking a 14% increase compared to the same month last year.
This data was shared in the monthly remittance report released by Bangladesh Bank.
Bankers have noted that expatriates have been sending relatively higher remittances since August, which is expected to ease pressure on the country's foreign exchange reserves.
They attributed this rise to increased confidence in the current government and the reduced influence of the informal hundi system.
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Despite the year-on-year increase, remittance inflows in November were 8.16% lower than the previous month, October.
Earlier this year, remittance inflows had declined by 3.2% in July, a period marked by political unrest and movements against the government. However, remittance inflows rebounded in subsequent months, with significant increases of 39% in August, 80% in September, and 21% in October.
For the fiscal year 2024 (July-November), total remittance inflows amounted to $11.13 billion, which is $2.32 billion, or 26.4%, higher than the same period in the previous fiscal year, according to the central bank's data.
The breakdown of remittance sources for November shows that $824 million came through state-owned banks, $145 million via specialised banks, $1,223 million through private banks, and $6 million through foreign banks.
Interestingly, nine banks reported zero remittance inflows during the month. This list includes the state-owned Bangladesh Development Bank Limited and Rajshahi Krishi Unnayan Bank, as well as private banks like Community Bank, Citizens Bank, ICB Islamic Bank, and Padma Bank.
In the foreign banking sector, Habib Bank, National Bank of Pakistan, and State Bank of India received no remittances.
Managing directors of private banks pointed out that money laundering has decreased since the interim government took office, with expatriates now favouring formal channels over the hundi system.
This shift has led to a significant increase in remittances through banks. Additionally, they noted that foreign payments, which stood at $1.5 billion when the government assumed power, have gradually declined to under $400 million.
Nearly 50 banks hold foreign currency long position
The rise in remittance inflows and the reduction in money laundering have increased the amount of foreign currency held by banks. A senior official from the central bank said that by the end of November, nearly 50 banks in the country were in a foreign currency long position.
The official explained that from early 2022 to September 2024, only 30 banks were in a long position, while the remaining 30 were in a short position. However, due to the growth in remittance inflows, most banks are now in a long position.
A bank's Foreign Exchange Net Open Position (NOP) is the difference between its foreign currency assets and liabilities at a given time. A long NOP means assets exceed liabilities, while a short NOP indicates liabilities are greater than assets.
Commenting on how remittance growth affects the dollar crisis, Sohail RK Hussain, managing director of Bank Asia, told TBS, "The current level of remittance inflows is undoubtedly very positive. I believe the reduction in capital flight is a key reason behind this growth in remittances."
