Overseas employees will enjoy a 2.5% cash incentive if they send five categories of service benefits in the form of remittance through formal channels.
The categories are retirement benefits such as pension funds, provident funds, leave salary, bonus and other gratuities, and retirement benefits paid by employers, according to a Bangladesh Bank (BB) notice.
The expatriates earlier did not have to state the source of income under the categories while sending remittances but the BB has instructed banks to ensure the source of funds before extending the cash incentive.
According to a BB official: “Remittance has been one of the major economic lifelines for the country, as the country’s import is much higher than its export earnings, so the latest move will help increase the flow of remittances which are facing a downward trend.”
According to the central bank sources, no other specific clauses have been included in the Finance Ministry's guideline on the incentive but some banks have recently wanted to know more about the details of the clauses.
Bangladesh Bank had requested the Finance Ministry to clarify the issue.
Subsequently, the Finance Ministry included the categories in the list of beneficiaries.
On January 20, a BB circular asked banks to confirm the authenticity of the income sources of the remittances based on evidence and must convert the foreign currency into Taka.
Under the previous rules, the banks were allowed to give cash incentives against remittance of $1,500 without verifying any document. If the amount exceeds $1,500, the banks are supposed to seek a copy of the remitter’s passport, an appointment letter from the employer or certification of BMET and a copy of the business license for the ones who run businesses.
As per the instructions from the Ministry of Finance, the central bank is raising the cash incentive to 2.5% from 2% to maintain a healthy foreign currency reserve.
Prior to the upward revision of the incentive amount on January 1, the remitters were receiving cash incentives at the rate of 2% from the beginning of the fiscal year 2020-2021.
Due to a record inflow of remittance and a drastic decline in import payments after the outbreak of Coronavirus, the country’s foreign currency reserve had reached $48 billion in August 2021.
The reserve, however, later decreased by more than $3.5 billion amid an increase in import payments coupled with a gradual decline in the inflow of remittance in the first half of the current fiscal year 2021-2022.
