A massive awareness campaign and regulatory reforms are essential to encourage Bangladeshi expatriates to send home their hard-earned money through secure and authorised fund transfer channels, said the country director of an international money transfer company.
The regulatory authority, commercial banks and cross-border money transfer operators (MTOs) in the country need to work together to this end in order to bring in more remittances through formal banking system, he said in an interview with the FE recently.
"Money transfer through unauthorised channels, largely known as 'hundi', may not decline in the near future, but regulatory authorities, especially the central bank, can take effective steps to slash its flow," said Mohammad Khairuzzaman, Country Director and Head of Operations of Transfast, an international money transfer and cross-border payments company.
He said there are four key reasons behind the informal flow of remittances into the country.
Firstly, remitters get higher exchange rates in money transfer via hundi, compared to the rate offered by the country's commercial banks.
Secondly, hundi is quite convenient for the migrant workers, as distribution channels of hundi reach the recipient family members to hand over the money instantly.
Thirdly, expatriates prefer hundi to formal channel because they believe in only 'send now, receive now' concept of transferring money no matter what platforms they are using - secure banking channel or unauthorised one.
And lastly, a good number of Bangladeshi migrants work illegally in different countries, especially in the Middle East, who cannot use formal channel to send remittances for lack of proper employment documents. They require such documents to open bank accounts.
The actual amount of remittances entering the country through unauthorised channels is still unknown and remains unaccounted for in the official records, Mr Khairuzzaman said.
According to the central bank's data, Bangladesh received remittances of US$ 13.53 billion in 2017 while it was $ 13.6 billion in 2016.
The cross-border money transfer mechanism expert also mentioned that the country's commercial banks, MTOs and exchange houses have been holding meetings with Bangladesh Bank to find a way to lower the cost of fund transfer to bring more people under the coverage of formal channels.
Meanwhile, about the future of remittance inflow in the country, Mr Khairuzzaman told the FE, "Recent reopening of job market in the United Arab Emirates (UAE) for Bangladeshi workers will boost remittance inflow hopefully in the third quarter (Q3) or at the beginning of Q4 this year."
The UAE has withdrawn a six-year ban on manpower recruitment from Bangladesh as the two governments recently signed a memorandum of understanding (MoU).
Under the agreement, the UAE will recruit Bangladeshi citizens in 19 categories, including labourer, sailor, watchman, shepherd, falconer, housekeeper, cook, nanny, farmer, gardener, private trainer, private tutor, farm supervisor and private driver.
Transfast, headquartered in New York, partially started operating in Bangladesh from 2009 incorporated with four banks while the company came into its full operation after taking licence from the government in 2011.
Currently, the MTO has partnership with 36 commercial banks with over 11,000 agent locations around the country so far while another seven banks are in the pipeline to get connected to it.
About current operations of Transfast, its country director said the company has set 'Vision 2020' to become top MTO in the country considering excellent business growth.
"It's an encouraging news for us that Bangladesh market share for Transfast entered 'single digit billion dollar' a year recently which is very cheering for the company and its staff," he added.
He also said though the company has entered Bangladesh market a bit late comparing to other MTOs, Transfast has been growing at 11-22 per cent every year since its formal inauguration in 2011.
In December last, Transfast partnered with BRAC Bank and bKash, Bangladesh's largest mobile financial service (MFS) provider, to enable global money transfers via bKash accounts instantly.
The new service will allow bKash's registered customers to use their mobile phones to receive remittances from abroad directly into their bKash accounts via Transfast.
The service accepts single transaction remittances of up to Tk 25,000 (approximately US$ 300); and combined monthly remittances of up to Tk 150,000 (approximately US$ 1,500) to a maximum of 20 transactions.
Talking about overall scenario of MTOs in the country, Mr Khairuzzaman said there is no common platform or association of Bangladesh counterparts of different MTOs where sector-related issues can be discussed.
"An association of the MTOs is needed to draw attention of the higher authority of respective organisations to working environment and job security of the professionals working in the sector," he added.
Transfast processes remittances through its direct-to-bank network, having 200,000 cash payout points in 120 countries across America, Asia, Africa and Europe. In 2007, the company received a private-equity investment from Greenhill Capital Partners, LLC and changed its name to Transfast Remittance LLC.
