Above two dozen people visited the Singair (Manikganj) branch of Probashi Kallyan Bank (PKB) between November 1 and 25 to inquire for what the bank had to offer in loans for aspirant migrant workers, and of the visitors the branch received the loan applications of 13.
It means majority of the visitors did not file loan applications. Or, it seems, the branch did not entertain the others.
Contacted over phone, an official of the branch, who wished not to be named, told Dhaka Tribune that the number of people visiting the branch for loan fell in the last six months due to volatile market of overseas jobs.
"Many people are waiting to go abroad under the labour visa, but recent developments in Saudi Arabia and Malaysia disappointed them," he added.
He, however, observed that the recent news of opening the labour market in Japan created a bit of hope among people aspiring to go abroad under work permit visa.
The bank chairman, Begum Samsun Nahar, claimed that they did not send back anyone empty-handed once they filed application for loan. "We can say that we do not turn down application for loan from us. We always try to entertain every loan applicant if the papers are authentic."
But a Bangladesh Bank (BB) survey shows that prospective migrant workers' access to finance from banking source is limited in the country, which is forcing them to attain high-cost borrowing from NGOs and individual money lenders, thus squeezing their income.
It says only two state-owned banks — Probashi Kallyan Bank (PKB) and Agrani Bank Ltd (ABL) — are operating expatriates' loan schemes.
At PKB, the cumulative disbursement of loan amounts to 39,290 applicants stood at Tk455.03 crore as of September 30 this year while at ABL it totals to Tk8.88 crore granted to 343 beneficiaries as of October 2019, according to the banks' official data.
The number of applicants given loan from PKB was 7,107 in 2018-19, 5,584 in 2017-18, 6,303 in 2016-17, 7,752 in 2015-16, 4,229 in 2014-15, 1126 in 2012-13 and 888 in 2011-12. During July-October periods of current financial year, the bank disbursed migration loans to 2,853 persons.
According to Bureau of Manpower Employment and Training, annual migration from Bangladesh was on an average about 5.2 lakh from 2004 to 2017. In 2017, a total of 10,08,525 people went abroad in pursuit of job.
As per the BB survey titled "A Survey on Loans for Expatriates - Its Uses and Impact", 32.4% of expatriates' migration cost come from bank loans, more than 5% from NGOs and money lender with higher rate of interest and about 11 percent from sale of property.
"Among the various challenges that the prospective migrant workers face, managing the required finance for migration is very much crucial," notes the survey.
It says loans to migrant workers is broadly linked to inward remittance and their narrow access to bank finance is impacting the inflow of expatriate wage negatively.
The country received $ 16.41 billion from expatriate workers in the FY 2018-19, according to Bangladesh Bank data.
The survey says current bleak status of bank finance for migrant workers is due to complicated policy, conservative behavior of bankers, extra charges in addition to the quoted rate of interest including service charge, documentation fee, stamp fee, CIB report fee, processing fee, insurance fee and VAT charge.
Besides, the centralized process of sanctioning loan requiring government officials as guarantors also impedes flow of credit to aspirant migrant workers, it points out.
None of the private banks run such loan scheme in the country.
In the survey, the BB observes that loans to prospective migrant workers provided only by the two banks are not sufficient to meet growing demand.
Therefore, the BB recommends that more banks should come forward to provide this loan with a view to reducing cost and other financial barriers in the path of migration.
The survey also recommends easing the procedures of loan disbursement, abolishing additional loan charges, enhancing the loan amount and its grace period, lowering the interest rate, financing skills development programs.
It has been observed that the migrant workers initially try to manage their funding from family savings or/and borrowings from relatives and then go for borrowing from the NGOs or local money lenders (mahajans) at a very high rate of interest.
It says cheaper and collateral free loan provision for the expatriates would be very useful in enhancing outflow of migrant workers to uphold a higher and sustainable inflow of remittances.
It says Bangladesh is a country of 164 million population including a big portion of 11.5 million expatriates. A large number (45 percent) of expatriates have migrated via agents and most (73 percent) of them live in the Middle East. Only 2 percent of migration takes place via legitimate government procedure.
Migration cost for 65 percent of the expatriates was above Tk3 lakh. Only for 15.5 percent of the expatriates, the migration cost was Tk1 to Tk2 lakh. Twenty-three percent of the expatriates had to pay above Tk5 lakh for migration.
It finds that 69 percent of the expatriates could not repay their loan because of irregularity of their jobs, unexpected work condition, migration of false documents, payment of loans taken from other sources (money lenders, NGO), sickness, delay in job and decreased salary.
Probashi Kallyan Bankye
This bank processes the migration loan approval in a faster three-day timeframe and disburses a maximum Tk200,000 at 9% interest, which is payable in 22 installments, with two months grace periods. The bank runs its activity through 64 branches across the country.
The bank runs two loan schemes for expatriate workers — one for facilitating finance covering necessary expenditure like travel cost, fooding and accommodation called 'Migration Loan' and the other for rehabilitation of a returnee migrant worker called 'Rehabilitation Loan'.
Since inception in 2011-12, the bank disbursed Tk452.16 crore to 39,121 migrant workers as migration loan. The outstanding loans as of October 2019 stood Tk208.08 crore to 20,291 recipients.
Under the 'Rehabilitation Loan' scheme, total disbursement stood at Tk2.87 crore to 169 recipients. Recovery against the loans was Tk3.06 crore.
Agrani Bank Ltd
The state-owned ABL introduced a loan scheme styled 'Agrani Bidesh Jaowar Loan' for aspirant migrant workers in 2014. The total disbursement under the scheme stood at Tk8.88 crore to 343 beneficiaries as of October 2019.
Currently, the bank's outstanding loans stands at Tk3.70 crore, out of which Tk2.72 crore is regular and Tk 0.99 crore irregular.
The bank's Assistant General Manager Sudhangsu Shekhor Samadder said 52 loan cases involving 26.75% of outstanding loan turned defaulted.
The number of regular loan cases is 197 while 94 loans were adjusted as payback completed.
"We have a marginal exposure of this loan. This is an unpopular product. We could not campaign enough for this loan," said Managing Director Mohammad Shams-Ul Islam.
The ABL runs operation with 955 branches across the country. Out of them, only 102 branches disburse this loan.
