Dhaka, Bangladesh (BBN)– The central bank of Bangladesh has relaxed the policy on drawing arrangement between overseas exchange houses and banks operating in Bangladesh aiming to expedite the flow of inward remittances.
Under the relaxation, the amount of security deposit for drawing arrangement came down to US$10,000 from $25,000 while security deposit for Non-Resident Taka (NRT) account got trimmed down to BDT 0.20 million from BDT 0.50 million, according to a notification, issued by the Bangladesh Bank (BB), the country’s central bank, on Tuesday.
But the banks can not provide any overdrawn facility in favour of money transfer institutions, it noted.
“Such policy relaxations will help revamping the flow of inward remittances in the near future through enhancing the number of drawing arrangement across the world,” a BB senior official told the BBN while explaining the main objective of the latest measures.
He also said the overseas exchange houses are expected to express their willingness for setting up fresh drawing arrangement with local banks.
All banks have already set up 1140 drawing arrangements abroad for collection of remittances from different parts of the world, according to the central banker.
“We’ve extended our policy supports in line with the bankers’ requirements to expedite the inflow of remittances through banking channel,” he noted.
The bankers urged the BB at a meeting on November 14 last to bring down the amount of security deposit for drawing arrangement to US$ 10,000 from the existing level of $25,000.
At the same meeting, SK Sur Chowdhury, deputy governor of the BB, asked the banks for taking effective measures to revamp the flow of inward remittances from next month.
The central bank of Bangladesh had taken the latest move as Prime Minister Sheikh Hasina had expressed her concern over downward projection of the inflow of remittances by the World Bank for the current calendar year.
The multilateral development-financing agency has projected that the flow of inward remittance will come down to US$14.9 billion by the end of 2016 from $15.39 billion a year ago.
The overall remittance inflow dropped by 15.65 cent in the first five months of the current fiscal year (FY) 2016-17 compared to the same period of the last fiscal.
The remittance receipts came down to $5.21 billion during the July-November period of the FY’17 from $6.17 billion in the same period of the previous fiscal.
Single-month receipts were estimated $951.37 million in November 2016, down by $59.62 million from the level of the previous month. In October last, the remittances came to $1.01 billion. It was $1.14 billion in November 2015.
“The flow of inward remittances dropped significantly in the recent months following lower fuel-oil prices on the global market alongside a rising trend in sending hard-earned money by expatriate Bangladeshis using informal channels,” another central banker told BBN to explain the fall.