Bangladesh remittance drops 18% three months on illegal money transfer

Latest Bangladesh Bank data shows remittance, one of the major planks of Bangladesh's economy, is in free fall.

According to the data published on Monday, the money inflow from the expatriates in the first quarter (July-September) of the current fiscal dropped to $3.18 billion, around 18 percent less than the same period last year.

Remittance in September plunged 12 percent to $1.04 billion from the previous month.

The country experienced a rise in the remittance flow in August, up to $1.18 billion from July's $1 billion.

State-run Agrani Bank's Chairman Zaid Bakht sees a 'slight' impact of the July 1 terror attack on a Dhaka cafe, but blamed mainly illegal channels to send money like 'Hundi'.

The central bank only counts the money remitted through banks and other legal channels; it does not take into account the money transferred illegally.

Bakht, a researcher at the Bangladesh Institute of Development Studies, said the expatriates were using the illegal channels due to the devaluation of the foreign currencies.

World Bank economist Zahid Hussain, speaking at a news conference marking publication of Bangladesh Development Update on Monday, said the drop in remittance is a 'challenge' for Bangladesh economy.

Bakht and Zahid have both expressed concern that the country's macro-economy would be affected if the fall prolonged.

Despite the remittance drop, the foreign currency reserves rose to $31.5 billion on Monday.

They credited the rise in the flow of foreign loans and drop in import cost for the 'satisfactory' reserves.

In 2015-16 fiscal year, remittance dropped 2.52 percent. It rose 7.6 percent in the previous fiscal year.