A convenient digital platform can be the most effective medium to attract more remittances through legal channels and shore up dwindling forex reserves, economists, bankers and policymakers say.
This will ensure that money sent through legal channels reaches beneficiaries safely and instantly along with making the remittance sending process significantly easier, they noted at a seminar titled "Remittance through legal channel: Prospects of digital platform" on Wednesday.
The Economic Reporters' Forum (ERF) organised the discussion at its office in the capital's Purana. Renowned economists, bankers and industry experts have put forward various recommendations for a better strategy to attract more remittances amid the growing dollar crisis.
Planning Minister MA Mannan as the chief guest at the event said because of social and psychological factors, the people are reluctant to go to banks for transactions when they receive remittances from their family members working abroad.
Rather, they find illegal channels as a quick and easier way to receive remittances, he noted.
Remittances cannot be increased unless the distance between expatriates and legal channels is reduced, he also said.
"Transactions with foreign countries on banking channels remain closed for three days a week. For this reason, hundi is being preferred as a better transaction route," he continued.
The government wants to break these traditional barriers and start a new trend. These issues must be dealt with. The finance ministry and the Bangladesh Bank are working on this, the minister said.
Ahsan H Mansur, executive director of Policy Research Institute, said, "To increase remittances through legal channels, the dollar market needs to be balanced. Migrant workers are more inclined to send remittances through hundi as they get higher exchange rates in illegal channels."
The government should motivate expatriates through various awareness programmes to send home dollars through legal channels, he also said.
Besides, attention should be given to increasing the use of digital services.
Dr Bazlul H Khondker, an economics professor at Dhaka University and chairman of the South Asian Network on Economic Modeling (Sanem), presented a keynote at the seminar.
He said, "In 2019 and 2020, remittance inflows into the country increased by large scale. At that time, the government took various steps, including introducing incentives and increasing digital transactions. At present, remittance service costs more than 6% globally. It should be reduced."
Remitters are choosing hundi because of the convenience of sending money quickly and at a much lower cost, he also said, adding that it will be possible to reduce the cost and time by half if digital platforms, including MFS, are used as legal channels.
"If the received remittance is cashed out, we will still not be able to maximise the benefit. Rather, if we can strengthen the ecosystem and create ways to use the digital money digitally, the country's economy will be stronger. For this, digital financial services should be patronised in the country," Bazlul H Khondker pointed out.
Masrur Reaz, chairman of Policy Exchange said, "Remittances can be brought quickly through digital channels. There is no alternative to using digital platforms to boost remittance inflows. If remittance inflows can be increased, it will be possible to meet the balance of payment deficit."
Sormindo Nilormi, an economics professor at Jahangirnagar University, said, "If it is possible to facilitate an easy and quicker system to send money through digital platforms, they will opt for digital channels to send remittances. It is also necessary to recognise the people who earn remittances working from Bangladesh. The definition of migrant workers also needs to be sorted out."
Md Iskandar Mia, former executive director and former deputy head of Bangladesh Financial Intelligence Unit, said, "Necessary initiatives should be taken to bring remittances of illegal migrant workers through legal channels. For that, engaging MFS agents can be a solution. It is also important to take steps to stop money laundering."
Sheikh Md Monirul Islam (retd), chief external and corporate affairs officer of bKash, said, "Currently, remittances sent by expatriates from more than 70 countries are entering Bangladesh through 75 money transfer organisations via settlements in 12 commercial banks. In 2021, Tk2,427 crore remittances were disbursed through bKash. At the end of this year, it is expected to reach around Tk4,000 crore."
Mohammed Monirul Moula, managing director and chief executive officer of Bangladesh Islami Bank Limited, thinks that if the problem of sending remittances by expatriate workers is lessened, it will be easier to deal with the existing challenge in terms of the foreign reserves.
If remittances are brought through digital channels, it will be easier to meet the shortage of foreign currency in the next two-three months, he said.
Emeritus Fellow of Unnayan Samannay Khondakar Sakhawat Ali said, "The dollars earned by expatriates is grabbed by an unscrupulous group. For this, hundi has to be solved at source level. Besides, remittances through legal channels will be increased if it is possible to introduce the facility of sending remittances directly using MFS for expatriates."
Presided over by ERF President Sharmeen Rinvy, the roundtable was moderated by its General Secretary SM Rashidul Islam.