Banks have sped up efforts to persuade remitters to send money home through the formal channel, with one bank luring customers with efficient, faster services and another offering higher rates.

The result of the growing competition is that the beneficiaries of remitters are getting more money with a lot of care, while the banks' margin from the exchange rate has come down significantly over the past one year.

“We had a margin of Tk 1 per US dollar a couple of years ago, but now it has come down to 15-20 paisa,” said Jahurul Alam, principal officer of Islami Bank Bangladesh Ltd (IBBL), the largest bank in terms of remittance channelling.

IBBL alone remitted 28 percent of the country's total remittances worth $11.65 billion in fiscal 2010-11. The trend also continues this year, said Alam.

“The remittance market has become so competitive that we cannot have a margin of more than 25 paisa. We used to get 50 paisa margin even 6-7 months ago,” said Abu Syed Md Yusuf, assistant vice president and in-charge of offshore banking of Jamuna Bank.

Jamuna Bank, which is a third generation private commercial bank, now deals with only $4 million of remittances on average a month.

Sliding foreign exchange reserve ($9.6 billion) and a rise in imports payments have made remittances costlier. Every bank offers Tk 80 plus for a dollar to be remitted through them. The price exceeded Tk 81 yesterday, according to bankers.

“This is a question of survival. If we don't pay against our letter of credit (LC), we'll lose customers,” said Abdus Sobhan, assistant vice president, international division, of Jamuna Bank.

They were talking to The Daily Star at the NRB (non-resident Bangladeshis) Fair 2011 organised by Probashi Kalyan Bank (Expatriate Welfare Bank) at Bangabandhu International Conference Centre.

Among the sources of foreign currencies, remittance is relatively cheaper money for the banks. The other sources of foreign exchange are the money that comes from inter-bank transactions and exports, but those are costlier than the remittances, the bankers said.

Besides a dramatic improvement in rates and services, the banks are getting tied up with money transfer companies, exchange houses, corresponding banks and non-government organisations to deliver remittances faster to the beneficiaries. Despite having a countrywide presence of branches, state-owned banks are missing the train.

Sonali Bank with nearly 1,200 branches across the country deals with only one-third of remittances than what IBBL does.

“Sonali's average remittance inflow per month stands at around $110 million,” said Rashid Ahmed, a deputy general manager of the Bank.

Three other state banks -- Agrani, Janata and Rupali -- get remittances much less than Sonali, which was by far the leader in this area a few years back.

Private bankers blamed the decline of remittances by state banks on their poor services.

Ahmed, however, denied poor services by his bank and said IBBL is doing well because Middle Eastern people have ownership in the bank.

The Daily Star/ Bangladesh/ 19th Dec 2011