Rate on white collar remittance increased by Tk7.5 to Tk107
Rate on white collar remittance increased by Tk7.5 to Tk107
Exchange offices will now function on holidays and
won't charge any fees for remittances.
White collar job holders will now have their
remittance rate raised by Tk7.50 to Tk107 in order to improve remittance flow,
whereas wage earners' remittance rate has been decreased by 50 paisa to Tk107.
The choice was made on Sunday evening at a meeting of
top executives from the Bangladesh Foreign Exchange Dealers' Association
(BAFEDA) and the Association of Bankers in Bangladesh (ABB).
The decision comes into
effect from today.
Previously, the remittance rate for people with white collar jobs
was Tk99.50 per import earning encashment rate.
White-collar workers frequently work in offices and receive their pay
through the banking system.
On October 31, the ABB and Bafeda met with the central bank to
discuss the policy choice relating to the remittance rate for people with white
collar jobs.
In addition to the exchange rate, it was decided that exchange
houses would remain open on holidays.
The settlement of export revenues was raised to Tk100 during the meeting by 50 paisa.
Typically, remittances from expatriates were accepted through the exchange houses of local banks.
Remittance fees can be as low as $1 and as high as $5 in Europe, the US, and the Middle East.
Only 10% of remittances to Bangladesh pass through domestic
exchange houses.
Remittance houses would remain open even on holidays, according to
a special resolution made at the meeting by Bafeda Chairman and Sonali Bank MD
Afzal Karim. This means that expatriate workers do not need to take any time
off from their jobs to send remittances.
He added that banks are not permitted to impose fees at any stage
of the transaction. However, foreign exchange houses will set their own
commission rates.
Several bankers claimed that 4/5 banks are unable to make the
promised (dollar) payments to other banks, according to meeting sources.
Some banks started to experience payment pressure as early as
October. It also expressed worry about potential future issues for the banks.
The ABB and Bafeda were given authority by the central bank to
take decisive action to maintain the stability of the foreign exchange market.
For all banks to receive remittances, a single dollar rate of no
more than Tk108 was set on September 11.
The remittance rate was later reduced to Tk107 per dollar and the
encashment rate for export revenues was set at Tk99.50 per dollar.
The remittance inflow decreased in the first month after Bafeda's
decision. Remittances decreased by $497 million in September compared to
August.
The lowest amount of remittances in nearly eight months, $1.52
billion, arrived in October, continuing the declining trend.
ABB official who wished to remain anonymous said, "Remittance inflow is low as a result of the rates being far higher in informal channels than in formal channels. It is a rate that was imposed, and rates cannot be imposed in this manner."
According to the official, this is the main reason remitters choose to use shady Hundi methods to transfer money home.
"Remittance inflow won't rise if the rate is maintained in
this manner. It will be exceedingly challenging to salvage the banks if the central
bank continues to experiment with this "the person stressed.
The fall in remittance inflow is concerning in light of the FX reserve issue, according to Zahid Hussain, a former chief economist at the World Bank's Dhaka office. Multiple exchange rates on the same market are by no means ideal.
"Users of Hundi receive Tk5 more per dollar than those who use the banking channel. To increase the flow of remittances, the central bank should now fix the remittance rate in coordination with the kerb market, he continued.
