Hundi Depletes Significant Remittance

In September, remittance inflows into Bangladesh surged by $1.07 billion, representing an 80.22% year-on-year increase. The country received $2.40 billion, up from $1.33 billion in the same month last year, and $180 million more than in August, marking the highest inflow in three months. This rise is largely due to expatriates shifting from informal channels like hundi to formal banking systems after the interim government was formed in August.

Expatriate Bangladeshis sent around $2.11 billion in remittances during the first 28 days of September in the fiscal year 2024-25, with state-owned and specialised banks handling $679.10 million and private banks receiving $1.43 billion, according to Bangladesh Bank data.

Bangladesh has received $1.63 billion in remittances during the first 21 days of September, with state-owned and specialised banks handling $550 million and private banks $1.08 billion, according to the Bangladesh Bank. The average daily inflow is $77.8 million, positioning the total remittance for September to potentially surpass $2.33 billion.

Remittance inflows from Saudi Arabia, the largest overseas labor market for Bangladeshi workers, have significantly declined, halving over three years. A report from Bangladesh Bank indicates that remittances dropped by $3.8 billion, or 52%, in FY24 compared to FY21, falling to $2.74 billion from $5.72 billion.

In the first 14 days of September, expatriate Bangladeshis sent $116.72 million in remittances through legal channels, equivalent to approximately 14,000 crore BDT (assuming an exchange rate of 120 BDT/USD). This follows $584.04 million received in the first week of the month.

In a circular issued the central bank announced a 2.5% incentive on remitted compensation paid by insurers or employers to expatriates due to physical injury or death. This is the first time such compensation will receive an incentive. The circular stated that the incentive would take effect immediately from the date of issuance.