Financial Intelligence warns 7 banks not to pay higher rate for remittances

The Bangladesh Financial Intelligence Unit has warned seven banks against paying higher rates for remittances than the rate fixed by the authority, saying they would face punishment if they continue doing so.
 
The Financial Intelligence Unit gave the warning in a meeting with the commercial bank officials held at the Bangladesh Bank yesterday, said sources.
 
Of the banks that were warned, one was state-owned while six were private.
 
On 3 July, a report titled "Remittance hits 35-month high in June" – published in The Business Standard – said many banks were offering a rate higher than the remittance rate of TK108.50 set by the Bangladesh Foreign Exchange Dealers' Association (Bafeda).
 
The central bank has advised all the banks to follow the exchange rate set by the association, but a number of banks were providing as much as Tk112-113 for each remittance dollar. In this situation, the Financial Intelligence Unit warned some banks on the instructions of higher authorities, said sources at the central bank.
 
A central bank official said, "The country's dollar market became unstable when some banks started paying higher rates, because they got more dollars, while the compliant banks received less remittances."
 
Another central bank official present at the meeting said a record number of Bangladeshis went abroad last year, but the country's remittance income has not increased accordingly. Officials of various commercial banks have suggested increasing the government incentive rate – which is currently 2.5% – to boost remittance inflow.

The managing director of a bank said the exchange rate for remittances is lower than the market price of dollars. Remittances will not increase if such a low rate is continued. 
 
Senior officials of several banks said aside from the seven banks which were warned yesterday, there were others which have been paying a higher rate for remittances.  A central bank official told TBS that meetings in this regard will be held with many more banks gradually.
 
Industry insiders said in addition to the banks, several money exchangers have been openly offering higher rates for remittances as well. International remittance houses such as Moneygram and TapTap are advertising dollar rates of up to Tk111.50 on their websites.
 
Data from the central bank reveals that Bangladesh received a total of $21.61 billion in remittances in FY23, marking a 2.75% increase compared to the previous fiscal year's $21.03 billion.