BB devising strategy to check probable misuse

HM Murtuza | Published at 12:00am on July 17, 2019

Bangladesh Bank is working to devise a strategy for prevention of possible misuse of the government-announced 2 per cent incentives against inward remittance of the wage earners.

Announcement by the finance minister AHM Mustafa Kamal in the budget for the fiscal year of 2019-20 to provide incentives against the wage earners’ remittance has prompted the central bank to address the scope for possible misuse.

To this end, the central bank has already held a meeting with the senior executives of the country’s banks, BB officials said.

Asked about the progress in implementing the budgetary announcement and possible bottlenecks, BB executive director Md Serajul Islam told New Age that they were working in this regard before making a final proposal to the finance ministry.

As per the latest data, remittance inflow hit record $16.4 billion in the immediate past fiscal year (2018-2019).

Considering the total remittance receipt in FY19, the government will have to spend around Tk 2,755.2 crore in each year for giving incentives against remittance.

Although there is no doubt that the government as well as the central bank has no objection in awarding remittance senders with cash incentives considering their contribution to the country’s economy, the possible misuse has become a major concern, senior executives of the central bank told New Age.

There is only single instance in the world, Pakistan, of giving incentives against wage earners’ remittance, but it has witnessed misuse of the scope, the BB officials said.

The exporters, who do not enjoy any government incentives against exports, might misuse the scope.

Besides the exporters, the exchange houses could also take advantage of the facility as money including illegal money might come in circulation if the incentives are introduced without adequate monitoring.

But tight monitoring or scrutiny over the inward remittance might put adverse impact on the earnings as many of the expatriates do not have sufficient knowledge to comply with the requirements.

Besides anticipation of misuse, bankers at a recent meeting with the central bank demanded that the government pay the incentive money to them in advance; otherwise it would create additional cost of fund for them.

Implementation of the goal number 10.c of the sustainable development goals has prompted the government to give the incentives.

Under the goal number 10.c of SDG, the government has mandate to bring down the cost of remittance sending to below 3 per cent on average and to ensure less than 5 per cent cost of sending money from any destination within 2030.

At present, Bangladeshi expatriates have to spend 4.23 per cent on average of total fund from sending money to Bangladesh.

BB executive director Mohammad Humayun Kabir told New Age that they were working to implement the government decision.