During the ongoing quota reform movement, the country experienced a significant disruption from July 18 to July 23, as the entire banking system shut down due to the internet blackout.
Although banking services have since returned to normal, the country's foreign income, particularly remittance income, has not fully recovered.
Expatriates have expressed concerns that the crisis in the banking sector will worsen due to their boycott campaign. They believe this movement will lead to a further decline in remittance income.
In response to the boycott and the significant drop in remittances last week, Bangladesh Bank took action by verbally instructing some banks to offer higher exchange rates for dollars to attract remittances.
By Monday, July 29, several banks had increased their rates for buying inward remittances by Tk0.5 to Tk1. This adjustment aims to encourage more remittances and stabilize the foreign income reserve.
Remitters’ point of view
Campaigns to boycott formal channels and use informal channels like hundi to send remittances are putting significant pressure on the reserve.
It is not only the law enforcement's actions in the ongoing quota movement that has angered the expatriates, it is also the mistreatment and harassment by employees of various government agencies these expatriates had to face.
All of these have motivated them to start the remittance boycott campaign, the expatriates said.
An expatriate worker in Oman seeking anonymity, told the Dhaka Tribune that the recent turmoil in the country has had a profound effect on him and others that they are no longer interested in sending remittances through the banking channel.
They said: “In the six years that I have been in Oman, I have always used official channels to send money home. But this, with the situation in the country for the last two weeks has made me not want to send money home at all. We have seen the torture of my brothers and sisters in the country by police, BDR and Army.
“Along with this incident, the mistreatment and harassment by government officials are also a big reason for this decision. You can surely remember how badly the expatriates were treated by the employees of various government agencies during Covid-19. All these things have also made us boycott sending remittance through the banking channel,” they explained.
“Now I don't want to support this government with my hard earned money to run the country. So I haven't sent money to the country yet.”
They added: “At least 150 expatriates whom I know in Oman have decided not to send remittances. In addition, I have come to know that at least 200-300 expatriates in Oman are no longer sending remittances through the remittance banking channel. They are now sending money through Hundi.”
What measures will make him send remittances again? They said: “If the government accepts all the demands of the protesters and prosecutes those who instigated the violence, maybe then our anger will be mitigated to some extent. Then we will start sending money again through official channels. This is our decision for now.”
Many migrants, disturbed by the brutal crackdown on protesters amid a total internet blackout, which largely cut off communications with their families back home, organized rallies and protests in various countries including in Europe, Asia, Middle East, the UK and USA.
Some of these rallies also called for a "shutdown" of remittances in solidarity with the quota reform protesters' enforcement of a "complete shutdown" since July 18.
In the UAE, the Abu Dhabi Federal Court of Appeal has already sentenced 57 Bangladeshi nationals to long prison terms after they organised protests in multiple locations.
Protests in some other countries, especially in the Middle East, were more muted because of local restrictions. Against this backdrop, the government has reportedly sent letters to our missions in foreign countries asking about those involved in such protests and the reasons for their agitation.
The flow of remittance was significantly disrupted last week. From July 19 to 24 a total of $78 million was received in the banking channel but in the first 18 days of July, the country received an average of $79 million in daily remittances.
That means Bangladesh received only one day’s remittance in those six days.
Bangladesh received US $1.5 billion in remittances in the first 24 days of July, according to the latest report from Bangladesh Bank.
Data shows, in April, Bangladeshi expatriates sent $2.04 billion, followed by $2.25 billion in May. June saw a record $2.54 billion in remittances, the highest in the last 47 months.
Officials from banks and MFS providers said their remittance collection remained suspended from midnight on July 18, when the internet outage began, until broadband services partially resumed on July 23.
Still, overall remittance mobilization by banks and MFS providers remains worse than normal, they added.
Higher rate
According to a central bank official, Bangladesh Bank on Sunday (July 28) verbally instructed some banks to offer a higher exchange rate for US dollars to lure remitters into sending their income through formal channels.
The move comes because of the recent five-day internet blackout affecting remittance collection through banks and mobile financial services (MFS) in the country, which has been suffering from a forex crisis for more than two years now.
Bangladesh Bank had introduced the crawling-peg system to determine foreign currency exchange rates in May, fixing the middle rate for US dollars at Tk117 per greenback as prescribed by the International Monetary Fund (IMF).
As per the new exchange rate system, the banks could offer a maximum of Tk118 per US dollar.
Now though, a good number of them immediately started offering rates of Tk118.50 to Tk119 per greenback upon receiving the instructions from the central bank.
Expert opinion
Bangladesh Bank Executive Director and spokesperson Md Mezbaul Haque said remittance collection remains disrupted as the country's internet access is still not fully restored. He is hopeful that expatriates will continue to send remittances through banking channels.
“Even though remittances arrived in the nostro accounts, complete reconciliation has not yet occurred. Once banking operations return to normal, a full account of the remittances for the month will be available by the end of the month,” he added.
Selim RF Hussain, managing director of BRAC Bank and chairman of the Association of Bankers Bangladesh, earlier said: “Overall remittance collection in July will likely be low due to the situation. But they would likely get a better understanding of the situation this week.”
The majority of remittances from the Middle East come through Islami Bank Bangladesh.
The bank collects more than one-fourth of the country's total remittance flow. The Managing Director (MD) of Islami Bank, Muhammad Munirul Moula, told the media that, after being closed for five consecutive days, limited banking activities resumed on Wednesday and Thursday. The remittances that arrived on these two days were sent during the closure.
“We have also heard about the campaign against sending remittances through banking channels. The impact of this campaign will become clear next week."
