Bangladesh is the 7th largest remittance receiving country in the world and now it accounts for about 11% of GDP

Bangladesh Bank Governor Dr Atiur Rahman said Bangladesh is now one of the five least costly corridors of remittances across the world because of efficiency enhancing activities in Bangladesh.

He said Bangladesh is the 7th largest remittance receiving country in the world which has been growing at double digits since 1980s, and now it accounts for about 11% of GDP.

He was delivering a speech at the Boston University Center for Finance, Law & Policy, USA on “Role of Remittance in Enhancing Inclusive Growth and Macroeconomic Stability” On Thursday.

The governor said mobile banking/smart cards, drawing arrangements, exchange houses, MFIs, Post Offices and uses of ICT is playing important role in collecting and distributing the remittances at low cost.

“Remittances are being increasingly used in investment rather than consumption creating significant impact on inclusive growth and macroeconomic stability,” he said.

As policy steps to smooth remittance inflow, separate savings instruments have been created for non-resident Bangladeshis, such as a non-resident foreign currency deposit, USD premium bond, wage-earners’ development bond, according to Bangladesh Bank.

Off branch remittance delivery to beneficiaries through smart card/mobile phone banking have been introduced and thirty seven banks have set up 1,084 drawing arrangements with 288 exchange houses all over the world to bring down remittance cost.

Consumption is the initial use of remittance funds by recipients. Loan repayments and home building and home renovation are also important uses. In the second round, families may utilise remittances for investments in micro to medium enterprises, such as grocery stores, poultry farms, beauty saloons, fish processing, hotels, and restaurants.

According to Bangladesh Bank data, in 2008-09, the remittance inflow was $9.7bn against the 650,059 migrant labour and it rose to $14.5bn in 2012-13 despite the number of migrant workers dropped to 441,301. Global Diaspora remittance flows projected to reach $550bn in 2013.

Remittance have contributed significantly to growing foreign exchange reserve of Bangladesh, which now stand at a historical high of more than USD$16bn.

Despite being a trade deficit country, Bangladesh has been enjoying a positive balance in the current account during the last five years because of the favorable impact of remittances.