No time to read? Just listen to the news!
TL;DR
- Remittances through MFS hit a 5-year high of Tk 1,101.8 crore in August 2024, marking a 113% year-on-year increase.
- The surge is attributed to banking disruptions, increased use of technology, government incentives, and cash benefits from MFS providers.
- bKash and Nagad have implemented various measures to facilitate easier and more cost-effective remittance transfers.
- The increase in remittances through MFS channels offers hope for bolstering Bangladesh’s dwindling foreign exchange reserves.
Bangladesh’s migrant workers sent home a record-breaking Tk 1,101.8 crore in remittances through mobile financial service (MFS) providers in August 2024, marking the highest monthly receipts through digital channels in the past five years. This figure represents a remarkable 113 percent year-on-year increase from the Tk 515.4 crore sent home through MFS providers in August 2023.
The surge in remittances through MFS channels offers a glimmer of hope for bolstering the country’s dwindling foreign exchange reserves, which currently stand at around $20 billion, far lower than the record $40.7 billion in August 2021.
Industry experts attribute the increase in remittance transactions through MFS to several factors, including banking disruptions and limited cash supplies to ATMs following the political changeover in August, the increasing use of technology, a 2.5 percent government incentive on remittances through formal channels, and various cash benefits offered by MFS providers.
MFS Providers Facilitate Significant Remittance Growth
Currently, at least 13 MFS platforms, including bKash, Nagad, and Rocket, operate in Bangladesh. According to data from the Bangladesh Bank, MFS providers facilitated 54.21 percent more remittances in August compared to the previous month. In July, expatriate workers had sent home Tk 7,144 crore through MFS channels.
An analysis of central bank data reveals that August’s remittance inflow through MFS channels was the highest since December 2018. The increase follows the recent political changeover on August 5, when former prime minister Sheikh Hasina resigned and fled the country amid a mass uprising.
With MFS channels contributing significantly, total remittances surged nearly 39 percent to $2.2 billion year-on-year in August. Moreover, overall remittance receipts continued to rise in September, jumping 80.28 percent year-on-year to $2.40 billion, according to the latest data from the Bangladesh Bank.
Policies and Efforts Encourage Formal Remittance Channels
Apart from ease of access and cash benefits, various policies from the central bank and continuous efforts of MFS providers have encouraged migrant workers to use formal channels for remittances. At the end of last year, the Bangladesh Bank doubled the maximum single-transaction limit for sending remittances to individual MFS accounts from Tk 1.25 lakh to Tk 2.5 lakh.
Ali Ahmed, chief commercial officer of bKash, stated that the central bank had recognized the critical role of remittance inflows in bolstering the country’s economy. He said, “Through concerted efforts and technological and distributional support of MFS providers, they have successfully channelled remittances through digital channels.”
bKash has built a robust partnership ecosystem for remittances, enabling seamless cross-border fund transfers from more than 130 countries through Money Transfer Operators (MTOs) and leading commercial banks. The company has also lowered cash-out fees, allowing beneficiaries to withdraw remittances at a minimal cost of Tk 7 per thousand from approximately 2,500 ATMs of 19 leading commercial banks.
Muhammad Zahidul Islam, head of media and communications at Nagad, said they had witnessed significant remittance earnings in August. “With the natural growth, we from Nagad have also given tremendous effort to bring more remittances, such as by onboarding world-class foreign partners. Currently, people from more than 200 countries can send remittances through Nagad to Bangladesh,” he said.
Nagad has already started a Tk 100 cashback campaign on top of the 2.5 percent government incentive to further boost inward remittance, which has garnered a huge response from non-resident Bangladeshis. Through such measures, top MFS providers like Nagad are playing a vital role in strengthening and elevating the country’s foreign exchange reserves.
As Bangladesh continues to navigate economic challenges, the surge in remittances through MFS channels provides a much-needed boost to the country’s foreign exchange reserves. The collaborative efforts of the central bank, MFS providers, and the government’s incentives have successfully encouraged migrant workers to utilize formal remittance channels, contributing to the overall growth of the economy.
Source: The Daily Star
