Despite a record-breaking inflow of remittances into Bangladesh, eight banks have failed to attract any share of the funds, raising questions about their channels and ability to tap into the country’s burgeoning remittance market. This development comes at a time when the country has seen an unprecedented surge in remittances, with expatriates sending a historic $3.29 billion ahead of Eid-ul-Fitr.
The eight banks, which include both state-owned and private institutions, have faced criticism for their inability to bring in a single taka of the remittances. Among the institutions that failed to capitalize on this massive influx of funds are the state-owned Bangladesh Development Bank Limited (BDBL) and Rajshahi Krishi Unnayan Bank (RAKB). In addition, three private banks-Citizen Bank, ICB Islamic Bank, and Padma Bank-also failed to attract any remittance inflow. Moreover, four foreign banks-Habib Bank, National Bank of Pakistan, State Bank of India, and Uril Bank-also saw zero remittance inflows during this period.
Record Remittance Flow amid Economic Uncertainty: Bangladesh has seen an all-time high in remittance inflows in recent months, with expatriates sending an extraordinary $3.29 billion in the first 19 days of April alone. This represents a significant boost to the country’s foreign currency reserves, which are vital for maintaining the country’s economic stability amidst ongoing challenges, such as the dollar crisis and inflation.
The pace of remittance collection remained robust even after Eid-ul-Fitr, showing a continued flow of funds into the country. In the first 19 days of April, expatriates sent $1.78 billion, averaging an impressive $90 million (around Tk 1,104 billion) per day. However, despite this record influx, the aforementioned eight banks failed to capture any of these remittance flows.
Banks Missing Out on Opportunities: The fact that eight banks, especially those with extensive networks in the country, have missed out on this significant opportunity has raised alarms among banking industry experts. While the country as a whole benefited from a substantial remittance boost, these banks did not manage to channel any funds from the expatriates.
Some industry experts believe the issue stems from operational inefficiencies, weak marketing strategies, and a lack of robust channels to connect with the expatriate community. "Remittance inflows are a major financial lifeline for the country, and it’s disheartening to see some banks missing out on the opportunity to capture even a portion of that," said one banking analyst, speaking on the condition of anonymity. "Banks that cannot tap into this market are not only failing their customers but also contributing less to the national economy, especially at a time when every dollar matters."
Additionally, some observers point out that these banks may not have had adequate outreach to foreign workers, particularly those in key remittance-sending countries like the Middle East, Europe, and the United States. While many expatriates already have established remittance channels with certain banks, the lack of competition from these eight banks could have led to missed opportunities.
Role of Foreign Exchange and Dollar Crisis: The foreign exchange crisis in Bangladesh has added another layer of complexity to the situation. With the country struggling to maintain its foreign currency reserves due to the dollar shortage, remittances play a crucial role in stabilizing the economy. The government has been actively encouraging remittance inflows by offering incentives to both expatriates and banks that bring in dollars.
Some of the banks that have failed to attract remittances may not have been able to compete with other banks that offer better rates, faster processing times, and more convenient services for sending remittances. As a result, expatriates may have preferred remittance channels with better offers or those with whom they already had established trust.
"These banks may need to reassess their strategies if they want to attract more remittances," said another banking expert. "They must improve their services, reach out to the expatriate community, and offer competitive rates to gain a share of this crucial foreign exchange flow."
The Impact of Remittances on Bangladesh’s Economy: Remittances have long been a cornerstone of Bangladesh’s economy, contributing to the livelihoods of millions of families and boosting the country’s foreign currency reserves. In 2023, remittances to Bangladesh reached over $21 billion, making it one of the top recipients of remittances globally. The surge in remittances during the early part of 2024 only highlights the growing importance of this sector.
With expatriates sending significant amounts of money back home, the impact on Bangladesh’s economy cannot be overstated. These funds contribute to the domestic economy by helping alleviate poverty, boosting consumption, and supporting the foreign exchange reserves.
The increase in remittance flow comes at a critical juncture when the country is dealing with a shortage of dollars, which has affected the economy. The remittances act as a buffer, easing some of the pressure on the local currency and providing essential liquidity to banks, which is vital for financing imports and meeting other foreign obligations.
What Needs to Be Done: While the issue of remittance inflows is a positive one for Bangladesh, the failure of eight banks to capitalize on the opportunity highlights significant challenges in the banking sector. To ensure that more remittances flow into the country, banks need to reassess their strategies and improve their services.
Here are some key recommendations for improving the remittance process and ensuring that banks do not miss out on future opportunities:
Better Outreach to Expatriates: Banks need to strengthen their communication channels with expatriates, particularly in countries where large numbers of Bangladeshis are working. Marketing campaigns and collaborations with remittance service providers could help attract more customers.
Competitive Exchange Rates: Offering competitive exchange rates for remittances can incentivize expatriates to choose certain banks over others. This is especially important as many Bangladeshi workers have access to a range of remittance channels, and rate-sensitive expatriates may opt for those that provide the best value.
Improving Online and Digital Remittance Channels: The digital remittance market has become increasingly popular, and banks must offer more convenient and efficient digital platforms for sending and receiving money. By improving their online banking services, banks can make remittance transactions faster and more accessible.
Building Trust: Trust is a key factor in choosing a remittance channel. Banks should work on building trust through transparent operations, customer service, and ensuring the safe and timely transfer of funds.
While Bangladesh is benefiting from record remittance inflows, the fact that eight banks failed to tap into this opportunity is a cause for concern. With remittances playing such a vital role in the country’s economy, banks that do not participate in this sector risk missing out on a crucial source of foreign currency. As the country continues to face a foreign exchange crisis, it is imperative that all banks make the necessary efforts to improve their services and attract remittances from expatriates. Only then can Bangladesh fully capitalize on this important financial lifeline.
