Remittance inflows in the country fell by 10.27% year-on-year in May due to a higher rate of the dollar in the open market, which lures expatriates towards hundi – an informal cross-border money-transfer method.
In May, expatriates sent $1.69 billion through the banking channel, down from $1.88 billion in the same month a year ago, according to data from the Bangladesh Bank.
According to bankers, the shortage of dollars in the country's banking system has led many businessmen to collect dollars from foreign sources through hundi.
Currently, expats are getting Tk108.50 plus 2.5% incentive on remittance sent through the banking channel while the cash dollar rate in the country's open market is Tk111-13. Besides, the cash dollar is fetching Tk115-16 in foreign markets.
According to a senior official at the central bank, many big businesses have resorted to collecting dollars from foreign sources through hundi, bypassing the official market. This has resulted in a decrease in the inflow of dollars through the banking channel.