Wednesday, October 5, 2022
HomeFREE SPEECHHundi hinders growth of remittances

Hundi hinders growth of remittances

In the previous term of the present government, quoting the Prime Minister’s order, the then Finance Minister Abul Maal Abdul Muhith had said that there would be no cost for the expatriates to send money to the country. It will be effective from 2017-18 financial year. That did not happen at all. Rather complexity, gossip and even cunning have increased. The situation is further complicated in the 2016 budget speech after the expatriates announced that there would be no cost to send money to the country. The question is do expatriates have to pay VAT on remittances? With this, Muhith’s satirical image-video started to be published. In case of emergency, a press release has to be issued from the National Board of Revenue-NBR. It was said that in the budget of 2018-19 fiscal year, value added tax-VAT or VAT was not imposed on remittances sent from abroad. Expatriates can send any amount of foreign currency or remittance through legitimate banking channels. The notification urges not to send remittances through illegal channels or hundi.

Incentives on remittances sent legally by expatriates were also announced later. It does not require any paperwork up to ৫ 1,500. There were some more guidelines in the policy of Bangladesh Bank in this regard. Later, in the budget of 2019-20 fiscal year, incentive rate of 2 percent was announced on remittances sent by expatriates. According to the announcement, from July 1, expatriates will get an incentive of Tk 2 if they send 100 rupees to the country. The budget also allocated Tk 3,060 crore for this. The reality is different. Bangladesh Bank has some accounts and information in this regard. According to a recent letter from the Ministry of Finance, it costs the expatriates around Rs 350 to send 100 dollars or 8,500 rupees to the country. The cost has risen further as the dollar has appreciated since August. At present, if the same amount of money is legally sent to the country, the government’s incentive is about 160 rupees. Excluding it, the cost is 160 rupees.

A review of this year’s June-based report shows that it currently costs expatriates around Rs 350 to send ড 100 remittances. In other words, the average cost per 100 rupees is three and a half rupees. Costs vary from country to country. The average cost of sending remittances to Bangladeshis from Saudi Arabia is three rupees 94 paise. The cost of sending from the United States is three rupees 60 paise. The cost from the UAE is three rupees 01 paise. The average cost of sending from the UK is three rupees 29 paise. And two rupees 91 paise from Malaysia. Three rupees 10 paise from Qatar, three rupees 14 paise from Oman, two rupees 50 paise from Kuwait, two rupees 7 paise from Singapore, two rupees 69 paise from Italy and a minimum of one rupees 36 paise from Bahrain.

Hundi accounts are different. It is beneficial for expatriates. If you send money to the country in hundi, the exchange rate of dollar is more. There is no other cost. The hundi is winning. Hundi is more popular among expatriates. Despite various initiatives and threats by the government, it has not been able to touch the hundi cycle. To prevent this, it is important to reduce the cost of sending money legally. Consideration can also be given to expanding Bangladeshi banks or exchange houses in exile. Earlier, Bangladesh Bank had proposed to the government to increase the cash incentive of low-income expatriates from 2 per cent to 3 per cent in order to increase the legal income of expatriates. That proposal is also worth considering after the continuous decline in expatriate income.

The number of network houses and exchange houses of Bangladeshi banks abroad is quite low. Expatriates have a tendency towards these. Considering this reality, the government may open the door for further thinking. Earlier, Bangladesh Bank had proposed to the government to increase the cash incentive of low-income expatriates from 2 per cent to 3 per cent in order to increase the legal income of expatriates. That proposal is also worth considering after the continuous decline in expatriate income.

Author: journalist-columnist; News Editor, Banglavision.

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