According to a recent study, Bangladeshi expats would benefit immensely if they sent remittances through digital platforms, as it would roughly halve the cost of sending money from abroad.
The global average transaction cost of sending money from one mobile wallet to another across different countries stood at 3.5% in Q3 2020, compared to 6.75% for other channels.
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Indeed, withdrawal fees are not included in the fees for transferring funds sent via digital platforms, said Bazlul Haque Khondker, president of the South Asian Network for Economic Modeling (Sanem).
He made the comments while presenting a research paper from his organization during a panel discussion on “Remittance Through Legal Channel: Prospects of Digital Platform” at the Economic Reporters’ Forum (ERF) office in Dhaka yesterday.
Also, it’s cheaper to send money digitally even when the recipient wants to withdraw the money, because the sender doesn’t need an agent to complete the transfers, Khondker added.
He then said that digital transfers are faster, safer and more convenient because neither the sender nor the receiver need to leave their home to transact.
“Thus, digital financial services (DFS) can boost remittances in the financial sector, especially during crises,” he added.
Ahsan H Mansur, executive director of the Policy Research Institute (PRI) of Bangladesh, said there is a need to increase the flow of remittances to bolster the country’s foreign exchange reserves as it loses about $1.5 billion each month due to surging imports.
Mansur went on to say that Bangladesh should aim to increase service exports to earn more funds.
Also, digital literacy should be ensured among migrant workers so that they can send remittances home through legal channels using electronic platforms instead of turning to Hundi operators, he said.
Most migrant workers in the country have no knowledge of digital money transfers and hence rely on illegal channels to send funds.
As a result, Hundi operators receive part of the money while Bangladesh is deprived of remittance, Mansur added.
Mr. Masrur Reaz, Chairman of the Policy Exchange of Bangladesh, said that global service exports grew by 18% last year, while merchandise exports increased by 3% over the same period, indicating the potential service exports.
“Japan, Jordan, Bulgaria, Poland, Romania and even Russia have hired a lot of labor and Bangladesh should send workers to these destinations,” he added.
Bangladeshis who live in North American countries are knowledgeable about digital money transfer, so they send money through legal channels using digital systems, said Sheikh Md Monirul Islam, Director of external and corporate affairs of bKash.
On the other hand, expatriates who work in Middle Eastern countries use banking channels, agents or hundi to send money.
As a result, the country is not receiving remittances at the expected level from this region, he said, adding that out of 1.3 crore Bangladeshi expatriates, 70 lakh live in various countries in the Middle East.
Mohammed Monirul Moula, Managing Director and Managing Director of Islami Bank Bangladesh, said launching interoperability in receiving remittances could solve the problem to a large extent.
Planning Minister MA Mannan said people are reluctant to send funds through banking channels because of their negative attitude towards these institutions.
“Senders are scared because they are not used to visiting banks regularly,” he added.
Additionally, the weekly holiday system in Bangladesh deters migrants from sending remittances through banks. Indeed, public holidays are Friday and Saturday in Bangladesh while it is Saturday and Sunday in other countries.
Sharmind Neelormi, professor of economics at Jahangirnagar University, said if it was possible to facilitate an easier and faster way to send money through digital platforms, then senders would opt for channels. electronics.
“There is a need to recognize people who earn funds by working from Bangladesh, while the definition of migrant workers also needs to be settled,” Neelormi added.
Md Iskandar Mia, former executive director and deputy head of the Financial Intelligence Unit of Bangladesh, said necessary initiatives should be taken to ensure that remittances from illegal migrant workers are carried out through legal channels.
“For this, hiring mobile financial service agents could be a solution. It is also important to take measures to stop money laundering,” he added.
ERF President Sharmeen Rinvy chaired the event, moderated by ERF Secretary General SM Rashidul Islam.