CPD surmises Hundi is diverting remittance to money laundering
Senior Correspondent, bdnews24.com
Published: 2017-01-08 02:55:53.0 BdST Updated: 2017-01-08 03:12:59.0 BdST
The Centre for Policy Dialogue (CPD) has observed that the remittance inflow does not reflect the surge in human resource outflow in the first six months of the 2016-17 fiscal.
The think tank believes transactions through Hundi might be the cause for such poor remittance figure.
CPD also says sending money through informal channel like Hundi leads to the rise of siphoning money out of the country.
The research body calls for a probe into the matter.
Hundi is an illegitimate or informal way of transferring money from one country to another through unlicensed individual brokers.
"We have two sets of hypotheses on this. Perhaps remittance is coming but it is not being routed through banking channels; May be it is coming through Hundi,” said CPD Research Fellow Towfiqul Islam Khan on Saturday.
He was speaking at a ceremony arranged to unveil CPD's Independent Review of Bangladesh’s Development (IRBD) anniversary edition at the BRAC Centre in the capital.
"Our workplaces abroad are growing. Then why is the remittance flow not increasing," he questioned.
He said that like other South Asian nations, Bangladesh too tows a negative line with regards to remittance. Moreover, the overall condition in our biggest market, Middle East is not very good, he added.
CPD's Towfiqul said, "Using the facility of mobile banking, Hundi is spreading to various places.”
“They are sending it on real time. In Singapore Hundi traders are using scratch cards. They can send the money to anyone buying such scratch cards.”
“It is said that some agents from Bangladesh are associated with banking. Bangladesh Bank is also probing the matter."
Iterating that outflow of cash is also related to this, he said, "Cash is coming in through illegitimate channels, along with it the same volume of cash is flowing out. So whether Hundi outflow is increasing along with money coming in is also something that needs to be looked into."
'Overall economy stable'
The CDP has said that the economy has remained largely stable in the first six months of the 2016-17 fiscal.
The report says that there are several positive tendencies on several fronts this financial year like growth and investment in the individual sectors.
"Some weakness has been spotted even in strong areas. One such is exports. Last year we were strong on exports, where now we have a weakness creeping in."
Speaking of a big leap in growth through exports, Towfiqul said, "Simultaneously non-government investment is sending some mixed signals. In negative areas, we see bank and remittance as the big ones."
"In the overall situation we are saying that budget implementation will need a big rectification."
"We are emphasising on banking because it is headed towards weakness every passing day," he said.
Speaking on expatriate policy, Towfiqul said, "We know from our immigration data as to how many people are going out. But how many are coming back, or how many are currently abroad, we do not have that data. If we do not have that data we cannot adopt proper policies."
'Interest pressure growing'
The report says that over the last 10-15 years dependence on domestic loans has increased. Two-thirds of the current loans are of this nature, the report states.
"Last year we saw 90% of budget deficit arose from this sector. When we borrow from domestic sources, the pressure on interest increases, then the pressure mounts on rate of interest."
"About 25% of revenue cost is spent on remitting interests. At the same time we are going for some new kinds of developments. We are taking certain new things from abroad which in the past we did not take. We are taking certain such loans from Russia, China and India that we did not take in the past."
"Receiving interests through savings certificates is also on the rise. Despite being a middle income nation, we will lose out on low-interest loan options," the report states.
However, Towfiqul predicted that the interest situation would not become alarming until 2020.
Professor Mustafizur Rahman, Executive Director, Debapriya Bhattacharya, Distinguished Fellow, Anisatul Fatema Yousuf, Director, Dialogue and Communication, Fahmida Khatun, Research Director, Khondaker Golam Moazzem, Additional Research Director and other researchers of CPD were present at the event.
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