Hundi has decreased, expatriate income is increasing legally

After the political changes on August 5, 2024, there has been an unprecedented increase in remittance flows into the country, which is playing an important role in restructuring the country's financial situation and economic recovery.

The latest data from Bangladesh Bank says that more than 30 billion US dollars in remittances came to the country in the 2024-25 fiscal year, which is the highest in the country's history. Earlier, the record was 24.77 billion dollars in the 2020-21 fiscal year. In the first two months of the current fiscal year (July-August), expatriates sent 4.9 billion dollars, which is 18 percent more than the same period last year.

Economists say that this remittance flow is not only increasing foreign exchange reserves, but is also playing a major role in keeping the currency exchange rate stable. As a result, pressure on the dollar market has decreased and is also having a positive impact on controlling inflation.

Bangladesh Bank Executive Director and Spokesperson Arif Hossain Khan said that the government is providing a 2.5 percent cash incentive for remittances sent through formal channels to encourage expatriates to send remittances through legal channels and for the maximum benefit of the nation.

He noted that expatriates are now being encouraged to leave the ‘hundi’ system and send money through legal banking channels, which is helping to increase the country’s foreign exchange reserves.

As remittance flows continue to increase, Bangladesh’s total foreign exchange reserves have increased to $31.28 billion as of September 24 this year.

Bankers said that the existing stable exchange rate has played an important role in encouraging remittance senders to choose legal channels. This is because the difference in currency prices between banks and the open market is very small.

According to market participants, remittance senders are getting the highest exchange rate of Tk 121.75 per dollar from the banking system. In the open market, this rate is Tk 122.50 per dollar.

According to a World Bank study, remittances have played a significant role in reducing poverty, lifting many Bangladeshis out of poverty. The impact is evident in the Human Development Index, as families who receive the money are now able to enroll in private schools and access essential medical services.

According to economists, this record flow is not only helping Bangladesh's economy to face short-term challenges, but also building a strong foundation for long-term development.