August remittance inflow surges 39% YoY, hitting $2.2b

Infographics: TBS

Bangladesh received a whopping $2.2 billion in remittances in the just concluded August, registering a 39% year-on-year increase, according to Bangladesh Bank data.

In August 2023, expatriates sent $1.6 billion in remittances. Compared to July 2024, remittance inflow in August surged by 16%. In July, the country's banks received $1.91 billion in remittances.

Syed Mahbubur Rahman, managing director and chief executive officer of Mutual Trust Bank, told The Business Standard, "Due to nationwide unrest, remittances during the first 10 days of August did not meet expectations. However, by the end of August, remittances had come in at a satisfactory level."

He added, "Typically, we receive close to $2 billion in remittances every month. Increasing this amount further would be beneficial for our economy."

According to the central bank data, remittances during the first 10 days of August amounted to $483 million. Following the period, remittances returned to a normal trend, averaging $580 million per week.

Several senior bank officials have said remittances did not increase significantly in the early days of August due to various factors, including the fall of Sheikh Hasina-led government in the face of mass uprising, the formation of a new interim government, and security concerns that led many banks to not operate at full capacity. 

Additionally, the country's instability in the second half of July and the internet shutdown for at least five days prevented many expatriates from sending remittances. As the situation gradually stabilised in the second week of August, the flow of remittances increased.

Commenting on the increase in remittances, the deputy managing director of a leading bank said that the central bank's decision to raise the dollar price by 2.5% played a role. 

"Shortly after the interim government took office, the dollar rate was increased by Tk3, bringing it to Tk120. There is a correlation between the dollar rate and the flow of remittances. The closer the dollar rate is to the market rate, the more encouraged expatriates will be to send remittances," he said. 

The banker added, "Last year, in August and September, remittances significantly decreased due to the central bank's restrictions on the dollar rate. However, in August of this year, with no such pressure on the dollar rate, remittances returned to normal levels."

Bangladesh Bank has taken different steps to increase remittance to overcome the foreign exchange crisis and increase reserves. In the last few months, these measures have had a positive impact on expatriate income or remittance coming into the country.

Remittance inflow varies for banks

Although remittance inflows grew by 39% in August this year compared to the same month last year, the increase was not uniform across all banks. Some banks, like Premier, Trust, and BRAC Bank, saw significant growth in their remittance income. On the other hand, remittances decreased for some banks, such as Social Islami, Pubali, and Sonali Bank.

The central bank data shows that Trust Bank received $74 million in remittances in August 2023, which nearly quadrupled to $290 million in the same month this year. 

Similarly, BRAC Bank received $206 million in remittances this August, up from $89 million in the same month last year. 

Premier Bank, which had received only $2 million in remittances in August 2023, saw a significant increase, receiving nearly $71 million this August.

However, the opposite trend is also evident. Among the eight banks that were once under the control of S Alam Group, six saw a decline in remittance inflows this August. Social Islami Bank experienced an 85% drop in remittances. The bank, which received $127 million in remittances in August last year, managed to secure only $19 million in remittances this August.

Except for Sonali Bank, all other state-owned banks have seen an increase in remittances. Compared to August last year, remittance inflows to state-owned banks grew by 109%.

The country head of a foreign exchange house told TBS that the growth of remittances is rate-sensitive; the banks offering higher rates attract more remittances. 

In August, banks that provided higher rates compared to others received more remittances, he said. 

"However, the overall health, network, and performance of a bank also influence remittance inflows. With the central bank halting dollar sales from reserves, state-owned banks have been trying to manage dollars from the remittance market, leading to an increase in their inflows."