Remittance & Access to

Finance : Conducive Policies and

Business Environment

Md. Ahsan Ullah

Executive Director
Bangladesh Bank
18 March 2015

Introduction

A Snapshot

Bangladesh is a small country in size

having a big population of about 160
millions.
Around 9 millions of them spread all over
the world who are popularly known as Non
Resident Bangladeshis (NRBs).
Out of such a big number of NRBs, most of
them are in Arabian countries, largely
unskilled marginal/small farmers coming
from rural areas.
Most of the NRBs in Europe and USA are
semi-skilled and skilled.

A Snapshot

Remittances Contribution is over 10% to GDP on

an average (5 years).
Remittances are rendering BOP support to reduce
trade gap.
NRBs have made significant socioeconomic
impact on community as well as household levels
through

improved standard of living,

higher investment in childrens education,
increased spending in healthcare and social security,
higher investment in income generating activities like SMEs and
other agro processing activities

Wage Remittance Flow

Year

Remittance

(In million

Growth

2004-05

USD)
3848.29

2005-06

4801.88

24.78%

2006-07

5978.47

24.50%

2007-08

7914.78

32.39%

2008-09

9689.26

22.42%

2009-10

10987.40

13.40%

2010-11

11650.32

6.03%

2011-12

12843.42

10.24%

2012-13

14461.14

12.60%

2013-14

14228.31

-1.61%

2014-15
(till February)

9,909.03

14.13%

Wage Remittance Flow

(million USD)
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
-

Remittance by Region
10,000

7,000

9,000

6,000

8,000
7,000

5,000

6,000

4,000

5,000

3,000

4,000

2,000

3,000
2,000

1,000

1,000
0

Others; 41%
Middle East; 59%

2014

(million USD)

Wage Earners Remittance

2014 (million USD)
Others ; 22%

KSA; 22%

Malaysia; 8%
UAE; 19%

UK; 6%

USA; 16%

Kuwait; 7%

Remittance to Macroeconomic Variables

The trends in share of remittance to macroeconomic variable points that
it is highly beneficial for Bangladesh economy in upholding domestic
demand in the recessionary global environment.

Year
Remit./GDP
Remit./Export
Remit./Import
Remittance/Aid
Enhancing
availability
of borrowing
resources
for both the

Remit./FDI

government
and the private
sector,
and augmenting
foreign
1.93
53.70
14.19
33.25
exchange reserve cushion.

1981-82
1991-92

2.65

42.53

24.49

52.62

21199.25

1994-95

3.16

34.49

20.53

68.87

19960.50

1999-00

4.14

33.89

25.76

132.15

508.96

2004-05

6.37

44.47

32.42

243.45

8181.04

2008-09

10.84

62.25

47.75

718.88

1029.65

2009-'10

10.98

67.80

51.37

503.56

1727.52

2010-11

10.28

50.96

35.40

647.83

1485.55

2012-13

11.04

53.97

42.70

510.07

830.71

2013-14

8.12

47.42

38.60

470.48

910.65

Table: Trends in Remittances as Percentage of key Macroeconomic Variables

Top 10 Recipients of
Remittances
(US$ billion, 2014e)
71
64

28

24

21

18

17

15

11

8th
Source: World Bank staff calculation based on data from IMF Balance of Payments Statistics Yearbooks
and data releases from
central banks, national statistical agencies, and World Bank country desks.

Remittance costs
Total cost of sending $200, including fees and exchange rate
margins (%)

Source: Remittance Prices Worldwide, the World

Bank.

Remittance Costs
Total average cost of sending about $200 along key
corridors in South Asia (including fees and exchange rate
margins)

Source: Remittance Prices Worldwide, the World

Bank.

NRBs & Remittance Behavior

Female; 3%

Parents; 45%
Spouse; 55%
Male; 97%

Gender

Recipient

NRBs & Remittance Behavior

Saved; 16%
Food Item; 33%
Durables & Others; 34%

Spent; 84%

Use of Remittance

Non-Food Items; 33%

Expendit
ure
Pattern

Savings Behaviour of NRBs

Recent National survey on remittance

(2013) shows

More than half of the remittance receiving

households (56.96%) saved a part of the
remittance they have received during last one
year.
About 84.01%
of the total remittance savers
Mode
kept theirSavings
savings
in banks
in different forms:
Account
66.07%
Bond Purchase

5.79%

DPS

7.13%

Time Deposits

5.02%

Popular Mode of Sending

Remittance

Banking channel is the most popular

and widely used system for sending
remittance in Bangladesh (76.08%).

Even though 10.04% use Hundi for sending

remittance.Mode
%
Western Union

6.87

Moneygram

1.65

Post Office

0.24

Bank

67.32

Friends & Others

8.50

Known Person

4.23

Hundi

10.04

Others

1.15

Total

100%

Remittance
Arrangements
Number of
Effective Drawing
Arrangements

1066+
with

& many more

Worldwide Drawing
Arrangements
Count
ry
UAE

# of
DA
259

Count
ry
USA

# of
DA
123

Countr
y

# of
DA

Malaysia

54

Oman

98

UK

94

Singapore

15

Kuwait

91

Italy

15

Multicountry

76

Qatar

75

Canada

18

KSA

57

Australia

17

Bahrain

47

Spain

Greece

Jordan

Brunei

& ore
m
y
n
s
m a dow
win

Bangladeshi Banks Overseas

Exchange Houses

Canada
Italy
Now
Malaysia
Total
Maldives
Oman
Singapore
UK
USA
South Africa

35

Remittance Distribution
Networks
Mobile Banking

28 Banks
NGOs for Remittance Distribution

27 NGOs
Others

SINGER
Post Office

OUTLETS

OUTLETS

Measures taken to combat

Hundi / Hawala
Reasons of Hundi
/Hawala

Policy Support from

BB

Lack of Banking and financial - 1:1 Urban-Rural Branch

services in remote areas
Opening Policy
- Distribution Network like
NGO, Mobile Banking
- Remittance Arrangement
High Fees and charges of
formal transfer
with Money Transfer
Companies
- Exchange House
Establishment
- Increasing Competition
- Time limit (max 2 working
Speed of Transfer
Days)

Measures taken to combat

Hundi / Hawala
Reasons of
Hundi/Hawala
Discrepencies between
official and unofficial
exchange rates
Difficulties faced by the
illegal immigrants in opening
bank accounts abroad
Money landering, terrorism
financing and tax evasion

Policy Support from

BB
- Stability of Foreign
Exchange Market
- Remittance Arrangement
for small size remittance
- No compromise

Investment Facilities for NRBs

Foreign currency deposits in the Non-resident

Foreign Currency (NFCD) account
Wage Earners Development Bond
US Dollar Investment Bond
US Dollar Premium Bond
Investment in Shares & Securities through
NITA
Quota for Government Plot
10 percent reserved quota for non-resident
Bangladeshis in primary shares (IPO)
Investment in EPZ

Wage Earners Development

Bond (WEDB)

Bond Denomination : Tk. 25,000; Tk.

50,000; Tk.1,00,000; Tk. 2,00,000; Tk.
5,00,000; Tk. 10,00,000 and Tk. 50,00,000
Maturity Period : 05(five) years
Interest Rate : 12% on maturity (in BDT)
Bond(s) can be purchased without opening
of F.C. Account
CIP status if investment in Wage Earners
Development Bond is BDT 8 Crore or above.
Death-risk-benefit available

US Dollar Investment Bond

Bond Denomination : US $ 500, US $ 1,000, US

$ 5,000, US $ 10,000 and US $50,000
Maturity Period : 03(three) years
Interest Rate : 6.5% on Maturity (in US $)
Eligible Purchaser : Bangladeshi Nationals
residing abroad and Bangladeshi origin Foreign
Nationals residing abroad
Bond(s) can be purchased without opening of F.C.
Account
CIP status if investment in US Dollar Investment
Bond is USD 1 million or above.
Death-risk-benefit available

US Dollar Premium Bond

Bangladesh Government Savings Bond issued in

equivalent U.S. Dollar against the foreign
exchange remitted by the Wage Earners
Bond Denomination : US $ 500, US $ 1,000, US
$ 5,000, US $ 10,000 and US $50,000
Maturity Period : 3(three) years
Interest Rate : 7.5% on Maturity (in US $)
Eligible Purchaser : Bangladeshi Nationals
residing abroad and Bangladeshi origin Foreign
Nationals residing abroad
CIP status if investment in US Dollar Premium
Bond is USD 1 million or above.
Death-risk-benefit available

Supportive Environment

Governments Policy is to ensure inclusive

economic growth.
In line with the Government policy, BB has
included financial inclusion in its monetary
policy statement for inclusive growth.
The objective of Financial Inclusion is
to bring the unbanked/ low
income/poor/weaker section of the
population under the umbrella of formal
financial environment at an affordable cost.

Supportive Environment

Governments vision is Digital Bangladesh: 2021

Digitization of the financial sector with advanced

infrastructure

Fully automated online settlement and electronic

fund transfers on board.

Availability of Cell phone and SIM cards at

affordable low cost.

Minimum subscription for opening bank account for

the farmers in the rural areas.

Govt. established IT-enabled Union Information

and Services Centres (UISC) operating at all
4,547 Union Parishads (UP, lowest tier of local
government) of the country.

Benefits of Financial Inclusion

Mobile Financial Services (MFS).
10 taka Accounts for the farmers.
School Banking.
Agent Banking

Among these MFS and Agent Banking are

fully digitized financial services

Use of Mobile Phone

31

Around 68% of the

country's population
as Active subscribers
created
an unprecedented
opportunity
to deliver basic financial
services
using the mobile phones

Regulatory Framework

Regulations A Guidelines on
Mobile Financial Services for the
Banks issued in September 2011and
amended in December 2011.

Business model Bangladesh follows

Bank-led model.

Distribution networks Banks to

appoint credible agents/partners for
delivering MFS to the unbanked
population cost-effectively utilizing
MNO/NGOs countrywide coverage

Bankers Gain from MFS

Increased number of customers

which ensures

New source of deposit

New source of income

Countrywide coverage at a
minimum operating cost.

Customers Gain

For the Customers, the Mobile

Financial Services has the
following benefits:

Safe deposit of their money and

earning interest on it.
Daily transactions in the account on
24/7 basis.
Sending and receiving local
remittance instantly.
Receiving inward foreign remittance

Current status of MFS in Bangladesh

No. of Banks got NOC-28

No. of Banks Launched MFS -19
No. of agents-540,984
No of registered customers- 25 million
Average no. of transactions/day-2.4
million
Average volume of Transaction/ dayTk3.49 Billion

(Note 1USD= around Tk77.80)

Banks by the NRBs

Specialized Bank for the

NRBs
Mission:
(1) Providing credit facility to the
expected migrants
(2) Helping the returnee migrants
for employment & investment
(3) Encouraging NRBs to send
remittance to the country
through quick and less costly
formal channel.

Access to Finance by Probashi

Kallyan Bank
Number of Migrant Loans Given
4500
4000
3500
3000
2500
2000
1500
1000
500
0
2011

2012

2013

2014

Till 2014, migrant loans of BDT 578 million

distributed by Probashi Kallyan Bank from
inception in 2011.

Foreign Exchange Reserve

(million

USD)

For the first time BB FX reserve hits USD 23 billion

mark.
High FX Reserve is the result of impressive remittance
growth.
25,000
The FX Reserve is now equivalent to almost 7 months
import payment.
20,000

15,000

10,000

5,000

Recent Achievements

Due to financial inclusion growth initiatives,

Bangladesh has achieved notable development
despite lingering global financial slowdown.
Macro Indicators

2009

2014

Change

GDP Growth Rate (FY)

5.74%

6.12%

+0.38%

FX Reserve (in billion USD)

7.47

22.31

+199%

Foreign Remittance (in

billion USD)

9.69

14.23

+47%

BOP (in million USD)

2058

5483

166%

Poverty Headcount Ratio

31.5% (2010)

24.12%

-7.38%

Consumer Protection Framework

One can e-mail to us atbb.cipc@bb.org.bd

Or
complain to Fax :0088-02-9530273
Or
complain using the electronic complaint
form:http://www.bb.org.bd/complainbox/compl

ainbox.php
Or
complain against Banks/Financial Institutions to the
following address:
General Manager
Financial Integrity & Customer Services Department
Bangladesh Bank, Head Office,
2nd Annex Building (17 floor)
Motijheel, Dhaka-1000, Bangladesh.

Way forward

Taking initiatives to increase the number of semiskilled and skilled workers instead of present
unskilled workers.

For this purpose, Bureau of Manpower ,

Employment and Training(BMET) has taken a
massive program for skill development.

Exploring new labor markets abroad in addition to

the existing markets.

Reducing cost of sending workers abroad, e.g.,

G2G & side by side private recruiting agencies.

Government is planning to float sovereign bond

targeting the NRBs.

Thank
you
Md. Ahsan Ullah
Executive Director
Bangladesh Bank