Internship Report on

Foreign Remittance of Sonali Bank Ltd

Prepared for:
Aftab Uddin Mahmud Chowdhury
Assistant Professor

Prepared by:
Md. Zihad Uddin
ID: 065
th
Batch: 19
Program: BBA

Date: 30/03/17

Department of Banking & Insurance

University of Dhaka
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Letter of Authorization
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Letter of Transmittal
May 15, 2016

The Internship Supervisor

Aftab Uddin Mahmud Chowdhury
Assistant Professor
Department of Banking & Insurance
University of Dhaka
Subject: Submission of the Internship Report on “Foreign Remittance of Sonali Bank Ltd”.

Dear Sir,

It is my pleasure to submit an internship report on “Foreign Remittance of Sonali Bank Ltd” as a

partial requirement of the BBA program under the Department of Banking & Insurance. The
activities of foreign remittance by Sonali Bank Ltd haves been analyzed thoroughly here.

Throughout the whole report, the activities, processes and performance of Sonali Bank Ltd on
foreign remittance have been explained. To provide a clear view, some graphs tabular data have
been added showing the performance of SBL in terms of remittance in our country as well as
with some developing countries.
Therefore, I will be highly encouraged and would remain grateful if you authorize the paper.

Md. Zihad Uddin

Roll: 19-065
Department of Banking & Insurance
University of Dhaka
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Declaration

I do hereby solemnly declare that the work presented in this internship report has been carried
out by me and has not been previously to any other university/college/organization for an
academic qualification/certificate/diploma/degree.

The work I have presented does not breach any existing copyright and no portion of this report
is copied from any work done earlier for a degree or otherwise.

I further undertake to indemnify the department against any loss or damage arising from
breach of the foregoing obligations.

Signature of the students

ID no:
Batch:
Date:
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Supervisor’s Certificate

This is to certify that the internship report on “Foreign Remittance of Sonali Bank Ltd” in the
bona fide record at the report is done by Md Zihad Uddin as a partial fulfillment of the
requirement of Bachelor of Business Administration (BBA) degree from the Department of
Banking & Insurance, University of Dhaka.

The report has been prepared under my guidance and is a record of the bona fide work carried
out successfully.

Signature of the Supervisor.

Date:
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Acknowledgement

At first I would like to convey my gratitude to the almighty Allah for giving me the opportunity
to complete this internship paper.

I would like to convey my heartfelt thanks and gratitude to the Assistant Professor Aftab Uddin
Mahmud Chowdhury, my supervisor, who instructed me to prepare this internship paper and
provided me her all-out efforts despite being busy with his daily schedules. I am very much
grateful to him for his cordial contribution.

I am also grateful to Shayamal Kumar Mondal (Manager) and Mr. Ruhul Amin (Senior
Administrative Officer) of Sonali Bank Ltd. (SBL) who helped me to complete this internship
report providing necessary information.

I also express my gratitude to the other officials of the bank who assisted me providing answers
of my various queries in smiley faces.

It is my privilege to provide thanks to all of my course mates for their cooperation and
continuous inspiration. I would also be thankful to the officials and staffs of the Department of
Banking & Insurance, University of Dhaka for their direct and indirect support.
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Executive Summary
Sonali Bank Ltd is the largest state owned commercial bank in Bangladesh and it has been
contributing to our economy since its birth. I have started my work with the meaning of remittance
later I explained the importance of it. During last 10 years the bank has been receiving huge amount
of remittance. In this report I have discussed about the operations of remittance unit of Sonali Bank
Ltd along with the position of our country among the developing countries in terms of remittance. I
have represented a graph showing remittance flows of last 10 years. Remittance receiving procedure
of Sonali Bank Ltd has also been described. There are two main category of remittance receiving
procedure; one is inward and another is outward remittance. And the charges of the bank for inward
and outward remittance along with the restrictions of Bangladesh Bank have been discussed. I have
shown the types of outward remittance in details. I have also showed a comparison between our
country and some developing countries in terms of remittance flows. I have also focused the
performance of the bank in terms of remittance flows in comparison to the percentage of total
remittance flows in our country. I have also analyzed along with findings the performance of the
bank in terms of remittance flows. Country wise wage earners remittance inflows of 2015-2016 have
also been represented through a graph. I have also described the remittance process having two major
channel-formal and informal. Then I have discussed why migrant choose informal channel to send
remittance and the disadvantages of informal channel. I have also mentioned the list of exchange
houses through which the bank receives remittance and send remittance. Determinants of remittance
have been explained with proper logic in details. Impact of remittance on our economy, financial
sectors and on micro-economic level, household level and community level have been described with
logical explanation. Socio economic impact of remittance and role of some institutions (such as MoF,
BB, FEPD etc) in perspective of remittance have been discussed broadly. There are two major types
of remittance management system. They are EFT (Electronic Fund Transfer) & SWIFT (Society for
Worldwide Interbank Fund Telecommunication). Features and advantages of RMS have also been
discussed I have also find out the problems related to the RMS. And provided recommendation of the
report.
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Table of Contents

Chapter Contents Page no

Chapter-1: 1.1 Background of the Study 12
Introduction 1.2 Objectives of the Study 13
1.3 Sources of Secondary Data 13
1.4 Limitations of the study 13
1.5 Scope of the Report 13
1.6 Research Methodology 14
1.7 Rationale of the Study 14
Chapter-02 2. Literature Review 16-17
Literature Review

Chapter-03 3.1 What is Foreign Remittance 19

About Foreign 3.2 Importance of Remittance 19
Remittance 3.3 Determinants of Foreign Remittance 19-24

Chapter-4: Foreign 4.1 Remittance Flow in Bangladesh 26

Remittance in 4.2 Remittance: Bangladesh and Some Developing
Bangladesh Countries of Asia Continent 27
4.3 Country wise Wage Earners Remittance inflows 2015-
2016 28
4.4 Impact of Foreign Remittance on Our Economy 29-31
4.5 Impact of foreign remittance on financial sector 31
4.6 Impacts of Remittances on Micro-economic Level 32
4.7 Impacts of Remittances on Household Level 32
4.8 Impacts of Remittances on Community Level 32
4.9 Socio-Economic Impact of Remittance 33
4.10 Role of Different Institutes Considering Foreign
Remittance 33-34

Chapter-5: 5.1 History 36

Background of 5.2 Vision and Mission 36
Sonali Bank Ltd 5.3 Core Values of SBL 36
5.4 Corporate Profile 37

Chapter-6: Foreign 6.1 Foreign Remittance Procedure of SBL 39

Remittance in 6.2 Inward Remittance 39-40
Sonali Bank Ltd 6.2.1 Purpose of Inward Remittance 40
(Procedure) 6.2.2 Source of Inward Remittance 40
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6.2.3 Bangladesh Bank Restrictions on Inward

Remittance 41
6.2.4 Role of Exchange Houses in foreign Inward
remittance 41
6.2.5 List of Exchange Houses 41-43
6.3 Outward Remittance: 43-44
6.3.1 Purpose of Outward Remittance 44
6.3.2 Bangladesh Bank Restrictions on Outward
Remittance 48
6.3 Mode of Foreign Inward and Outward Remittance 48

Chapter-7: Foreign 7.1 Foreign Remittance Process 50

Remittance in 7.1.2 Formal Channel 50
Sonali Bank Ltd 7.1.3 Informal Channel 50-51
(Process) 7.2 Disadvantages of informal channel of remittance 51
7.3 Bangladesh Bank initiatives to bring more remittances
in formal channels 51
Chapter-8: Foreign 8.1 Remittance Management System (RMS) 53
Remittance System 8.2 Advantages of RMS 54
in Sonali Bank 8.3 Features of RMS (Remittance Management System) for
Ltd. Middle East Remittance 54

Chapter-9: Foreign 9.1 Performance Measurement 56

Remittance in 9.2 Analysis and Findings 57
Sonali Bank Ltd
(Performance
measurement and
Analysis)
Chapter-10: 10.1 Problems of Sonali Bank Ltd in Remittance
Problems, Management System 59
recommendation 10.2 Recommendation 59
and Conclusion 10.3 Conclusion 59
Chapter-11: 11.1 References 61-63
References, 11.2 Appendix 63-64
Appendix and 11.3 Internship Diary 64-65
Internship Diary
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List of Graphs

Graph no Subject Page no

01 Country wise migration of 2015-2016. 20
02 Country wise remittance flow of 2015-2016 21
03 Category-wise Overseas Employment from 1976 to 2015 22
04 Remittance flows from 2005 to 2015 26
05 Country wise remittance flow of 2015 27
06 Country wise remittance flow in percentage of total remittance. 28
07 Remittance flow in percentage of total remittance from 2005-2015 29
08 Inward remittance flow from 2011 to 2015. 39
09 Outward remittance of SBL from 2011 to 2015. 43
10 Remittance flow of SBL from 2005 to 2015 (percentage of total 56
remittance

List of Tables

Table no Subject Page

01 Utilization patterns of remittance in Bangladesh (in percentage. 30
02 Charges of SBL on Inward Remittance Services 40
03 List of exchange houses. 41-43
04 Charges of SBL on Outward Remittance Services 44
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Chapter-1: Introduction
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1.1 Background of the Study:

To help the Non-resident Bangladeshis for remitting their earnings to home through legal
channels Wage Earners' Scheme was initiated in 1974. That scheme soon became very popular
among the Bangladeshi migrant workers working abroad. Migrants of Bangladesh remitted some
$11.8 million to their home country in the fiscal year of 1974-75. The amount of remittance
increased over $350 million in the fiscal year of 1980-81 and $750 million in the fiscal year of
1990-91. Since then Bangladesh has been receiving higher remittance year by year. Since the
number of emigrant workers from Bangladesh has been rapidly increased over the years, there is
a significant rise in the amount of annual remittance to the country. In June, 2015 Bangladesh
receives almost $15 billion remittance amount.
Remittance is rising day by day as a key force to the growth of economy and reduction in
poverty in Bangladesh. In indeed, it is the second position among the foreign currency earnings
sector of Bangladesh (Bangladesh Bank, 2012).

Bangladesh is one of the largest remittance receiver among other countries in the world. It has a
large number of people working abroad as skilled, semiskilled or unskilled manpower. The
Middle East countries like Saudi Arabia, UAE, Kuwait, Qatar, Oman, Iran etc. are major
countries where the workers of Bangladesh go and work hardly for earning money. Remittance
wage earners plays an important role to match the gap of trade deficit (Import payment is higher
than export receipt) of Bangladesh.

ILO defines foreign remittance as the portion of migrant workers’ earnings sent back from the
country of employment to the country of origin. Migration contributes to the national economy
in two major ways; firstly it reduces unemployment and secondly migration results in remittance
flows for the country. Inflow of remittance has been increasing every year because of steady
growth n migration over the year and it’s also favorable to the development of the country.

Remittances have helped to ameliorate the social and economic indicators like nutrition, living
condition and housing, education, healthcare, poverty reduction, social security, and investment
activities of the recipient households. Remittances have been playing a large role to the
economic growth and the livelihoods of people in Bangladesh. Remittance income is more
valuable for any developing country like Bangladesh. The importance of remittances has also
evolved against most of the macroeconomic variables along with the contribution to the GDP.

Remittance contributes to our national economy in a large scale by increasing foreign exchange
reserve, per capita income and employment opportunities. Bangladesh has been continuously
received robust remittance because migrant workers are working hard and earning huge money
in abroad and thus the GDP (Gross Domestic Product) of Bangladesh has been expanding. In
2016, the remittance which has sent by the migrant workers is the 5.15 percent of the total GDP
($195 billion) of Bangladesh. With these remittances, the government has been compensating
trade deficit. The determinants of remittance include employment in abroad, GDP growth,
exchange rate and oil price. Remittance is contributing to alleviate the poverty of Bangladesh
through micro-enterprise development, generating substantial employment and income.
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Remittance also contributes to the expansion of financial market activities such as banks and
insurance companies and the development of payment systems through enhancing direct capital
flows and distributing those funds to users end and for investment or finance consumption
purposes. The government of Bangladesh is using remittance income to build schools, colleges,
universities hospitals, roads, & highways, bridges, culverts, etc. Remittance income is positively
the socio-economic condition of migrant families. Remittance income makes more strong local
currency (Bangladesh) against US dollar.

1.2 Objectives of the Study:

Remittance unit of Sonali Bank Ltd plays a vital role like other commercial banks in our economy.
The main objective of the study has been mentioned below:

➢ To find out the remittance process of Sonali Bank Ltd;

➢ To analyze and find out the remittance income of Bangladesh;
➢ To know the impact of remittance income on the economy of Bangladesh;
➢ To know the impact of remittance on financial institutions such as banks and
insurance companies;
➢ To explore the potential opportunity of remittance income in Bangladesh;
➢ To find out the problems of remittance income of Bangladesh; and
➢ To recommend some suggestions based on findings to overcome the barriers of
remittance income in Bangladesh

1.3 Sources of Secondary Data:

➢Annual reports of the Sonali Bank Limited.
➢ Consolidated Income Statements and Balance Sheets.
➢ Official records of the bank.
➢ Some published research report, books, journals, articles and policy matters.
➢ Bangladesh Bank website and other websites.
1.4 Limitations of the Study:
➢Difficulty in collecting some primary data because of company secrecy.
➢ The record system of the annual report is not efficient for related data collection.
➢ Lack of access to full remittance service providing process.
1.5 Scope of the Report:
The scope of this report was extended to the foreign remittance activities of Sonali Bank
Limited. In my report, I have highlighted the various steps, procedures of SBL remittance. I have
also discussed about the process and income of the SBL remittance after learning from the bank
personnel. So the scope of the report covers the specific knowledge on SBL remittance. I have
tried to analyze and evaluate of foreign remittance income of our country based on adequate
information contained in documents and articles. I have tried to show the actual impact of
remittance on our economy as well as on the profit of banking sector.
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1.6 Research Methodology

This research study has been conducted and analyzed on the basis of secondary data and
information. The sample period of these secondary data and information is for last 10 years.
These data and information were collected from different A-ranked journals, articles, published
books, conference proceedings, newspapers, and from last 5 years annual report of Sonali Bank
Ltd. A large part of data and information of this report was collected from the website of
Bangladesh Bank, Ministry of Expatriates’ Welfare and Overseas Employment, Bureau of
Manpower, Employment and Training, and the World Bank.

This report mainly focused on three things. Firstly, it shows the remittance income of Bangladesh.
Secondly, It shows the impact of remittance on our economy and financial sector. At last, it
investigates and find out the opportunities and challenges of remittance income in Bangladesh.
Tabular, chart, and graphical representation have been used to properly reflect the actual data and
information.

1.7 Rationale of the Study:

As remittance is the lifeline of a country Sonali Bank Ltd should extend their remittance services
and improve the condition of the bank through remittance flows. Remittance can also increase
the profit of bank by receiving the higher remittance.

I have done this report to show up performance of Sonali Bank Ltd in terms of remittance and
also find out the reasons why the bank is receiving lower remittance at recent years. And the
ways through which the bank overcome this problem.
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Chapter-2: Literature Review

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2. Literature Review
Bangladesh is one of the leading remittance recipient countries through the export of its labour
services to the Middle East and South East Asian countries since the early 1970s. Remittance is
known as the life line of Bangladesh economy. Remittance income increased from $24 million
in 1976 to $11.1 billion in 2010 and contributing to 12% of GDP of the country (World Bank,
2011). These large inflows of remittances are having colossal development effects in the
country and a single paper is inadequate to examine all these effects. At the national level, the
implications of this remittance flow are enormous. The country’s foreign currency reserve is
supported by this remittance therefore remittance is playing a crucial role in supporting the
balance of payment. Remittance also accounts for thirty per cent (30%) of the national savings.
Research also shows positive impact of remittance on consumption, investment and imports.
Potentially remittances inflows can have strong development impacts in the economy.

At present there are more than 7 million Bangladeshi expatriates are working in the Middle
East’s countries, Malaysia, Singapore, Korea, USA, Canada, UK, Europe, Australia, New
Zealand, etc. The number of illegal migrants should be taken into consideration. Despite
ongoing political, diplomatic crisis and economic recession in the Middle East’s countries,
United States and Europe, overseas workers of Bangladesh remitted $20.62 billion (10%
growth over the last year) in June 13, 2015 and it is a record in the country’s history. Moreover,
Bangladesh has maintained a steady 6% plus growth over most of the last 10 years with the aid
of strong export and remittance growth. (REMITTANCE, F, 2015)

Remittances can help relax the budget constraint in the recipient economies and increase
consumption of both durables and nondurables. Moreover remittances can lead to higher
accumulation of human capital through allowing for education and health care, and also can
lead to increased physical and financial investment. The inflow of remittances on the macro-
economy can lead to accelerated long-run growth as a result of additional investments in
physical and human capital IMF (2005).

In last few decades, the remittance amount has increased as the number of Bangladeshi migrants in
world’s other countries are increasing. Siddiqui (2003) states, Bangladesh has a long history of
migration. Migration has shaped and is still shaping Bangladeshi society. showed that three-
quarters of sixty two (62) villages migrating from rural areas migrate internally, and some twenty
four per cent (24%) people of them can migrate overseas (Afsar, 2004),
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Puri and Ritzema (2001) tell that remittance is the portion of international migrant workers’
earnings sent back from the country of employment to the country of origin, play a central role in
the economies of many labor sending countries. Each additional migrant worker brings in $ 816 in
remittances annually, Hussain and Naeem (2009). Osmani (2004) tells that remittances have been
identified as one of the three factors that have been responsible for reducing the overall incidence of
poverty in Bangladesh. Remittance inflows increase during downturns as emigrant workers went to
provide financial support to the family members in the country of their origin (Sayan, 2006).
Remittance inflows increase during downturns as emigrant workers went to provide financial
support to the family members in the country of their origin (Sayan, 2006).

Transfer of remittances takes place through different methods. Forty six per cent (46%) of the
total volume of remittance has been channeled through official sources, around forty (40 %)
through hundi, four point six one per cent (4.61%) through friends and relatives, and about
eight per cent (8%) of the total was hand carried by migrant workers themselves when they
visited home (Siddiqui & Abrar 2001).

Banks are the major actors in remittance transfer. On the issue of transfer of remittance the
banking services have to be made more attractive to wean clients away from hundi. Banks have
to match the level of services currently provided by the hundi operators such as cost and speed.
Different steps may be undertaken to improve the quality of services provided by the banks
(Siddiqui & Abrar 2001)

Remittance service is not only used by migrants but also government uses to settle import
export transactions etc. Salim (1992) point out that remittances are used to make import
payments and are used for productive investment by the government. Ali (1981) identified
overseas remittances achieving a favorable balance of payments and as well as creating a new
resources base for the country.
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Chapter-3: About
Foreign Remittance
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3.1 What is Foreign Remittance?

Remittances actually refers to the transfer of funds by the migrants workers (expatriates) to their
families at home. Foreign remittance define the transfer of foreign currencies from one
place/person to another place/person. Elaborately foreign remittances refers to sale and purchase
of all foreign currencies for the purposes of Import, Export, Travel and others. Anyway,
particularly Foreign Remittance means sale and purchase of foreign currencies for the purposes
except export and import.

3.2 Importance of Foreign Remittance

In any developing countries the common problem is shortages of foreign exchange reserve which
is very essential to pay the import bills. Bangladesh is not an exceptional country but Bangladesh
depends more on remittances to meet the problem of payment of the import bills.
Remittances functions as an alternative to inefficient or nonexistent credit markets and also
promotes growth by smoothing the investment constraint. There may be positive impact of
remittances on economic growth if remittances are used for the purpose of children’s education
and welfare expenses such as health care, rehabilitation. There may be a positive impact on labor
productivity and output of the home country in the long run. A positive multiplier effects on
GDP may be occurred because of spending remittances on either consumption or real estate.
Remittances may act as an alternative way to promote investment in those countries in which
there is poor financial sector. Foreign remittance has a great impact on socio economic
conditions of a country. Banking system also makes profit through remittance and can expand its
financial inclusion program.
There may be negative impact of remittances on growth in the host country if
“demonstration effect” exist. To consume import the remittance recipients can be motivated.

3.3 Determinants of Foreign Remittance:

Migration stock:

It is generally supposed that there is a correlation between increase in the number of migrant
workers abroad and level of remittances. Howsoever, it is important to determine the amount of
remittance sent home by migrants on the basis of compositional features of them. Mixing of
temporary and permanent migrants is such a feature where the temporary migrants are thought to
send higher proportion of their income. Remittance flow has been increasing from those
countries to which our country people go to earn more money. For an example, Most number of
migrant labor workers are working in Saudi Arabia so the remittance flow from Saudi Arabia is
higher than any other countries in the world. Other countries such as U.A.E, Oman, Malaysia etc
have also large number of Bangladeshi migrants and so our country receives huge remittance
from that countries.
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To understand the correlation two graphs has been represented below:

Graph 01: Country wise migration of 2015-2016.

MIGRATION: COUNTRY WISE

Others 15287

Iraq 18720

Mauritius 9432

Brunei 12190

Egypt 1359

Japan 264

Italy 47

UK 15

South Korea 4048

Count Sigapore 110253

ry
name Malaysia 70609

Sudan 1089

Libya 231

Jordan 45110

Labanon 34208

Baharain 92887

Qatar 244347

Oman 318106

Kuwait 56660

UAE 33402

KSA 202183

Number of migrants

Source: bmet.gov.bd/BMET/viewStatReport.action?reportnumber=20
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Graph 02: Country wise remittance flow of 2015-2016

REMITTANCE FLOW: COUNTRY WISE

2649

2340

In
Thousa
nd
992
711
566 489 399
306
192 122 121 94 55 49 42 32 29 21 10 1

Country

Source: Wage Earners Remittance inflows: Selected Country wise, Bangladesh Bank

From the above mentioned two graphs we can say that there is a moderate correlation between
the number of country people migrated and remittance flows. We also see that some countries
have a large number of Bangladeshi migrants but the remittance flows from that countries are not
expected because of that countries’ economic recession, political instability. And migrants from
some countries such as Oman, Malaysia, Singapore, Kuwait etc have been increasingly sending
remittance to our country because of stable situation in those countries.

Composition of migrants in regard of skill is also another sight. Lower skilled workers tend to
send a higher proportion of their lower income to the country of origin. On the contrary, there is
a negative relationship between unskilled workers and remittances. Unskilled labor reduces the
average remittance size because of small earnings. And so it is proved that there is a positive
relationship between income and human capital. Number of professional workers are least.
Though they earn huge, they do not send the whole amount to the country.
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Graph 03: Category-wise Overseas Employment from 1976 to 2015

2%3% 5%

Professional
21%
Skilled
Semi skilled
Les skilled
Others
69%

Source: BMET Figure of June, 2015

Host Country Economic Condition:

Many studies found significant relationship between host countries’ output with the flow of
remittances. At present we know that the economic condition of Saudi Arabia is not good
because of falling the price of oil and gold. Many expatriates in Saudi Arabia are not getting
salaries at proper time and many people lose their jobs because of company’s decision to reduce
employees. As a result there is a negative impact on remittance flow from Saudi Arabia. Because
of bad economic conditions many people are not willing to go to Saudi Arabia though the govt.
of K.S.A has released a large number of Visas. Expected economic condition of the labor
importing countries may raise because of existing migrant workers’ wages and creates a positive
incentive on demanding for low-cost foreign workers. Therefore, the present and future flow of
remittances can increase in home country of migrants. If higher number of migrants sent abroad,
the future flow will be increased depending on the ability of home country to arbitrate with the
host countries. However, the balance between the skill level of prospective workers and the
demand of host countries would also be important factor for potential future remittance.

Home Country Economic Condition:

The migrants’ home country economic condition is also regarded as one of the important
determinants of remittances of workers. An adverse economic situation in the migrants’ home
country will play a vital role in sending remittances. Adverse economic condition results in a fall in
income of a family in a home country may lead to a surge in inflow of remittances as the migrant will
send more remittance to family by working harder. In case of considering the flow of remittances
from various source countries to home country, we don’t use home country economic
 P a g e | 23

activities directly in our model while we use income deferential between host and home country
to reflect the benevolence motive to remit.

Income Differential:

The ratio of GDP of host and home country at purchasing power parity (PPP) is used to measure
income differential between host and home country. The benefits of using this measure over
other measures are of considering for non-tradeables. Valuation of non-tradeables depends on
decision of remitters because they send remittance to purchasing goods and services at home.
One can dispute that the flow of remittances has a propensity to rise during the economic
downturn in home country if the estimated coefficient of this variable is positive. Chami et al
(2005) used the difference between home and host country (US) per capita output to reflect the
benevolence motive in their empirical model. Schiopu and Siegfried (2006) used the ratio of
GDP per capita in USD at PPP as a proxy for the income differential.

Dummy variables:

The recent worldwide surge in the flow of workers’ remittances has been occurred because of
regulatory tightening for the terrorist attack on USA on September 11, 2001 and it’s supported
by many surveys. Two different factors are supposed to have contributed in this regard; one is
the increase in monitoring by financial regulators on remittance service providers, which caused
a shift of remittances from informal to formal sources. Another may have resulted from the
uncertainty of deportation among undocumented migrants, inducing them to send a larger
proportion of their income.

Inflation Differential:

There may be increase or decrease in the flow of remittances due to higher inflation in the home
country relative to host country can. Higher inflation at home country reduces the purchasing
power of family of migrants. Therefore the migrants try to send more remittances. On the
contrary, it also represents more risk and uncertainty in the home country relative to host
country. If money of domestic country is depreciated, migrants will intend to send more
remittance to home country as the families at home country will receive more money in local
currency. If money of domestic country is appreciated, migrants will intend to send less
remittance to home country as the families at home country will receive less money in local
currency With high level of attachment to the family in the home country, they may send more
money to buy real estate and other tangible goods or for saving at home in domestic currency.

Dollar depreciation against major currencies increased the dollar value of non-dollar remittances
over time to host country, thereby discouraging them to send more remittances. Inflation
differential is created by using the difference between annual percentage change in the consumer
price index of home and the host country.
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Return on financial assets:

The level of remittances should be correlated with the return on financial assets if remittances are
influenced by investment motive. So remittances in home country can be negatively correlated
with the host country real interest rate or positively correlated with the home country real interest
rate. Increase in real interest rate differential between home and host country should have effect
on the level of remittances, assuming equal market risk in both countries. We used return on
short-term financial assets (3-month deposit interest rate) minus inflation (consumer prices) as a
proxy to estimate the real interest rate of host and home country. Interest rate differential is the
home country real interest rate minus host country real interest rate.

Exchange rate:

Workers’ motive to send remittance is influenced by bilateral exchange rate between host and home
country. Due to exchange rate depreciation two opposing effects may arise. They are namely wealth
effect and substitution effect. Prices of goods and services reduce in the foreign currency because of
depreciation or devaluation of home currency. A remitter buys more foreign goods rather than
domestic ones due to this condition. On the contrary, the remittance sender becomes affluent as
his/her income increases in the domestic currency. Thus he is encouraged to buy more goods
(including real estates) and services in home country. The remittance flows in the home country may
temporarily increase because of depreciation but eventually it might undermine the confidence of
remitters in the economy. Meaningful depreciation of domestic currency in the floating rule also
played a key role in the current increase in workers’ remittance in the country. To calculate the
bilateral exchange rates, IFS use the ratio of BDT/USD exchange rate and host country’s rate with
USD. The exchange rate may become internal cause to remittances (higher amount of remittances
may lead to stronger currency). Domestic currency experienced continuous devaluation against in the
face of increasing pressures in the balance of payments. Under the above conditions, the increasing
of remittance flows leads to a stronger currency in our country.
 P a g e | 25

Chapter-4: Foreign Remittance in

Bangladesh
 P a g e | 26

4.1 Remittance Flow in Bangladesh:

Remittance flow in Bangladesh has been increasing year by year. Now Bangladesh is one of the
best remittance receiving countries among the developing countries. The economic, micro
economic and socio economic conditions are improving year by year because of receiving
Total foreign remittance flow into Bangladesh has been shown show in a table and later graphically
represented:-

Graph 04: Remittance flows from 2005 to 2015

Remittance

14.96 15.08
14.1
13.85

12.05
10.84
Billion Dollars

10.51

8.93

6.55
5.41
4.63

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Year

(Source:tradingeconomics.com/bangladesh/remittances)

In the graph we see that the remittance flow into our economy has been increased from 2005 to
2015 because higher export of manpower in various countries and increase in income level of
foreign workers. But from 2015 to 2016(Dec) remittance flow is in decreasing trends because of
political, diplomatic crisis and economic recession in the Middle East’s countries, United States
and Europe.

Economic experts of Bangladesh, column writers in newspapers, have expected the remittance
flow might be decreased because of reduction in oil prices and gold which are the main
contributing properties of some middle-east countries where a large number of Bangladeshi
migrants are working.
 P a g e | 27

4.2 Remittance: Bangladesh and Some Developing Countries of

Asia Continent
To know the position of Bangladesh in regard of receiving remittance from foreign countries we
need to compare with other developing countries. Through the comparison we can learn about
how much Bangladesh is forwarding. Here I have provided a graphical representation on
remittance flow of some developing countries of Asia continent.
The presented data are remittance flow of year 2015:
Graph 05: Country wise remittance flow of 2015

Remittance Flow
80
70
72.2
60 63.9
50
US $
BILLIONS 40

30
29.7
20
20.1
10 15.8
10.5
7.2 6.6 6.6 5.7
0

NAME OF COUNTRIES

Source: Migration and Remittances Factbook, World Bank, 2016

Here we can see that India is receiving highest remittance ($72.2 Billion) among the developing
countries. It also ranks in no 1 position in the world in regard of receiving remittance. India is leading
in receiving remittance because largest number of migrant workers of India are in various countries
in the world. We know that China is the largest country in Asia Continent and it has the largest
population in the world. So the number of migrant workers are also in large number. In 2015 China is
nd
the 2 highest remittance receiving country in the world as well as in Asia continent also.
Philippines and Pakistan are positioning before Bangladesh with respectively $29.7 and
$20.1billions. Bangladesh is receiving much remittance but still lagging far behind of Pakistan.

Bangladesh Bank has taken many steps to increase the volume of remittance by discouraging
informal channels.
 P a g e | 28

4.3 Country wise Wage Earners Remittance inflows 2015-2016

Wage earners of various countries send remittance in our country. A diagram has been given
below to understand that from which countries we receive more and less remittance.
Graph 06: Country wise remittance flow in percentage of total remittance.
K.S.A.
Remittance Flow
U.A.E.
(%)
Others U.S.A.
Malaysia
HongkongGermJapLibyaIranany
AustraliaS.Kore

Italy 5%

Singapore
0%
0%
K.S.A.
2%
Qatar 20% Kuwait
3%

Bahrain
3%
3% Oman
U.K. U.K.
6%
Oman U.A.E. Bahrain
6%
Kuwait 18% Qatar

7% Singapor
Malaysia e
9% U.S.A. Italy
16%
Australia

S. Korea

Germany

Source: Wage Earners Remittance inflows: Selected Country wise, Bangladesh Bank
Migrant workers in Saudi Arabia send more remittance than other countries in the world. Our
country receives 20% of total remittance from Saudi Arabia. Half of the migrant workers are
working in Saudi Arabia. Major remittance comes from middle-east countries such as Saudi
Arabia, United Arab Emirate, Kuwait, Oman, Qatar etc.
Bangladesh receives 16% of total remittance from USA. Many skilled, semi-skilled workers are
working in USA for the family of home country. They send remittance at regular intervals. Some
European countries also have Bangladeshi migrant workers. That’s why we receive remittance from
European countries. Bangladeshi migrant workers are also working in Africa Continent countries
such as Libya, South Africa, Egypt remitting money to our country for supporting family.
 P a g e | 29

4.4 Impact of Foreign Remittance on Our Economy:

The contribution of foreign remittance rising of living standard can not be described so easily. So
the importance of foreign remittance in the economy of Bangladesh is widely recognized and
requires little reiteration.

➢ Impact on GDP:
The Gross Domestic Product (GDP) is one of the main exponents used to get a perception
about the health of a country's economy. It is determined with the total dollar value of all
goods and services produced over a specific time period. GDP is calculated as:

GDP = private consumption + gross investment + government investment + government

spending + (exports - imports).

Remittance has a great impact on our economy. We know that the increase in consumer
spending in our economy increases GDP. Increase in foreign remittance has been
gradually boosting our GDP (Gross Domestic Product).

Graph 07: Remittance flow in percentage of total remittance from 2005-2015

Remittance Flow
(% of GDP)

10.26 10.57
9.75
9.40 9.37 9.23
Percentage 8.65
8.23
6.67 7.73
7.53
 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
year

(Source:theglobaleconomy.com/Bangladesh/Remittances/ &
theglobaleconomy.com/Bangladesh/GDP current_USD/)
 P a g e | 30

➢ Impact on the GNP:

Gross National product (GNP), a broad measure of a nation's total economic activity,
measures the value of all finished goods and services produced in a country in one year
by its nationals.

GNP is calculated as:

GNP = GDP + Net income inflow from abroad – Net income outflow to foreign countries.

Increase in foreign remittance also increase the national income. As the national income
increase the consumption of goods by the country people also increase. So, production of
goods by the different organizations increases as well. It increases our country’s GNP.

➢ Impact of remittance on consumption:

Remittance flow to our country has changed the life of the families of migrants. Now
they can admit their children to private schools and can afford nutrition food and can also
bear the treatment cost of family members. Therefore increase in remittance increase the
consumption of goods by people of the country due to increase in the level of income of
country people.

Utilization of Remittances in Bangladesh

Table 01: Utilization patterns of remittance in Bangladesh (in percentage.

Purposes Remittances used (%)

Food and Clothes 20.45
Medical Treatment 3.22
Child Education 2.75
Agricultural land purchase 11.24
Homestead land purchase 0.96
Home construction / repair 15.02
Release of mortgage land 2.24
Taking mortgage of land 1.99
Repayment of loan(for migration) 10.55
Repayment of loan (other purpose) 3.47
Investment in Business 4.76
Savings/Fixed deposit 3.07
Insurance 0.33
Social ceremonies 9.07
Gift/donation to relatives 0.94
Send relatives for pilgrimage 0.92
Community development activities 0.09
Sending family members abroad 7.19
Furniture 0.69
Others 1.05
Total 100
Source: Siddiqui, Tanseem (2003), Migrant worker remittances and Microfinance in Bangladesh.
 P a g e | 31

➢ Increase savings:
Foreign remittance has increased the level of income of country people. Now can save
money after their expenditures. Therefore the remittance received by our country people
is saved in different banks by making short term or long term deposit.

➢ Increase capital:
A big source of capital in different banks is comprised because of savings by the local
people whose relatives are sending remittance from different developed countries. This
huge amount of money is investing is different project by the bank to make profit.

➢ Impact of remittance on investment:

Foreign remittance is increasing the investment of our country. The remittance is using
for small and big investment in different project, establishing firm or industry, small or
big shop which increases the proper utilization of money.

➢ Increase employment:
Many people of country have been moving to developed countries to earn extra money.
As a result the unemployed people gets job in foreign countries and unemployment rate
decreases and employment increases. As the investment increase, the employments of our
country also increase. The people of our country are getting jobs in different project, firm
or industries.

➢ Impact of remittance on import:

It has a negative impact on our economy too. By increasing remittance, it also increases
consumption of foreign product. It increases import of foreign products. People have
enough money to buy foreign product, although government is trying to save our
domestic companies by implementing necessary rules and regulation. Thus the domestic
markets lose profit because of selling less products.

4.5 Impact of foreign remittance on financial sector.

Remittance flows play an important role in the development of financial sector. Financial
institutions like banks provide remittance service to the local people in exchange of
certain commission. The impacts of remittance on financial sector are as follows.

➢ Increase in profit of banks due to charges for proving remittance facility.

➢ Increase of financial inclusion program of banks and financial institutions.
➢ Increase in investment amounts
➢amountIncrease in deposit amount because of not withdrawing full remittance
by the beneficiaries.
➢ Increase in the number of bank accounts.
➢ Consumption of the recipients of remittance on financial services increases.
➢ Remittance recipients invest in productive sectors or starts a business.
 P a g e | 32

4.6 Impacts of Remittances on Micro-economic Level:

➢ Strengthening balance of payments by provision of foreign exchange.
➢ Remittances are stable and counter-cyclical.
➢of localDeterioration
currency.
of balance of trade by stimulation of import and appreciation

➢ Social imbalance.

➢destination
Remittances tend to decrease as migrant community is more established in the
country.
➢ Economic dependency of remittances.

4.7 Impacts of Remittances on Household Level:

➢ Family can fulfill basic needs.
➢ Opening up of opportunities for investing in children’s education, health care etc.
➢ Loosening of constraints in family budget to invest in business or savings.
➢ Emergency resources.
➢ Social security resource base.
➢ Dependence on remittances and neglect of local productive activities by families.
➢ Hardly used for productive investment
4.8 Impacts of Remittances on Community Level:
➢ Boost local economy.
➢ Financing local development projects.
➢ Allow families of migrants to meet basic nutritional needs.
➢ Living condition and housing improved.
➢ Invest for education of children
➢ Increased investment for healthcare
➢ Social security for elderly people increased
➢ Increase inequality between families who receive remittances and those who do not.
➢ Inflation
➢ Increased investment in business or income generating Activities
4.9 Socio-Economic Impact of Remittance
Remittance has a great impact on our socio economic factors. Remittance flows have changed
the scenario of the socio economic condition of our country by adding the income and
consumption level of immigrant workers’ family. Now rural areas people are building Houses
like urban areas’ people. They send their children to private school and college. They use high
configured smartphone with internet connection and LED TV. They live like urban areas people.
The scenario of the economy of society has been changed only because of remittance.
Remittance has the following impacts on our socio-economic condition:
 P a g e | 33

➢ The economic development of the country is ensured by improving the economic

condition of the migrants through remittance.
➢ Unskilled and illiterate people of rural areas can contribute to the development of society.
➢ It improves the ability of investment for self-employment and entrepreneurship.
➢for movement
Hotel, traveling, transportation and other businesses get momentum in the country
of migrant workers.
➢ The financial capability and purchasing power of the migrant workers have been
enhancing.
➢environment,
The migrant workers are being conscious about cleanliness, hygienic
necessity of literacy, discipline, and standard of living.
➢ Technological advancement in migrant workers.
➢ Migrant workers family members get involved with banks and other financial institutions.
➢have theNow rural people wants to use gas facility without using chimney because they
ability to pay utility bills.
➢ At present rural people get the financial services and remittance through banking
agents and mobile banking services. So they need not to go to town for financial services.

4.10 Role of Different Institutes Considering Foreign Remittance

➢ Ministry of Finance:

Ministry of Finance (MoF) is a government body that works with state budget, taxation
and economic policy. This major policy making body is related to banking and
remittance. Macro-economic policies that affect exchange rate, monetary and fiscal
mechanisms, foreign exchange reserve etc. are regulated by this ministry.

➢ Bangladesh Bank:

Among other powers and functions, BB regulates scheduled bank activities, acts as a
clearing-house, retain foreign exchange reserves and monitors floating exchange rate
mechanism in the current accounts. Bangladesh Bank exhorts the nationalized and private
banks to connect with foreign banks and exchange houses in the enlisted countries. It has
an isolated department for regulating and monitoring remittance entitled Foreign.

➢ Exchange Policy Department (FEPD):

This department also plays an important role to foreign remittance sector. This
department mainly generates, analyses, interprets and distributes data on inflow of
remittance. It provides update information about remittance with proper description and
showing also positive and negative trends in remittance.

➢ Nationalized Commercial Banks (NCBs):

Nationalized Commercial Banks (NCBs) of Bangladesh make direct banking facilities
available at the doorsteps of Bangladeshi emigrants specially in those countries where a large
number of Bangladeshis are employed. Four NCBs are deeply involved in remittance
 P a g e | 34

transfer. These are Sonali Bank, Janata Bank, Agrani Bank and Pubali Bank Ltd. Within
these four NCBs have more than 5000 branches. Through them they can disburse
remittances even in distant areas. Besides their own branches, NCBs have opened
exchange houses in joint collaboration with different banks and financial institutions in
different countries of the world.

➢ Private Commercial Banks

Private Commercial Banks (PCBs) are also involved in remittance transfer. Of the PCBs,
Islami Bank of Bangladesh Ltd (IBBL) has been found to be most proactive in the area of
migrants’ remittance. National Bank, International Finance and Investment Corporation
(IFIC), Prime Bank and Uttara Bank are other private banks involved in remittance
transfer. Most of their activities are in the Middle East. Saudi Arabia is the major
working area of Islami Bank along with Qatar, Bahrain and UAE
 P a g e | 35

Chapter-5: Background of Sonali

Bank Ltd
 P a g e | 36

5.1 History:
Sonali Bank is the largest commercial bank in Bangladesh which was established in 1972 under
Presidential Order No. 26 of 1972. The bank is fully owned by the government of the People’s
Republic of Bangladesh. At present the bank has 1209 branches including two overseas
branches (Kolkata and Siliguri in India). Out of total 1209 branches, 644 are operating in the
rural areas and 563 in the urban areas. Besides, foreign trade operations are performed in 45
branches (Authorized Dealer or AD branches).

From 10 December 2002 Sonali Bank (UK) Ltd (a joint venture company of Sonali Bank and
Govt. of Bangladesh) has been operating to channelize banking activities to cover the whole
Europe. Sonali Exchange Co. Inc., a subsidiary company, was incorporated on 4 April 1994
under the laws of the State of New York; Department of State licensed on 17 October 1994 by
the State of New York Banking Department and commenced operation as an International
Money Transmitter from 12 December 1994 through which Bangladeshi citizens living in the
USA are conveniently remitting money to Bangladesh. There are three representative offices of
Sonali bank in Jeddah and Riyadh of KSA and another in Kuwait engaged in motivating
Bangladeshi expatriates living there to remit money through banking channel. The bank started
th
its new journey and changed its structure named Sonali Bank Limited on 15 November, 2007.
Now it is governed by a Board of Directors consisting of 09(nine) members headed by a
Chairman, Mr. Md. Ashraful Moqbul.

5.2 Vision and Mission:

Socially committed leading banking institution with global presence.

Dedicated to extend a whole range of quality products that support divergent needs of people
aiming at enriching their lives, creating value for the stakeholders and contributing towards
socio-economic development of the country.

5.3 Core Values of SBL:

➢ Integrity
➢ Insight
➢ Respect & Courtesy
➢ Fairness & Commitment
➢ Harmony & Team Spirit
 P a g e | 37

5.3 Corporate Profile

Sonali Bank
Name of the Company :
Limited
Chairman :
Mr. Md. Ashraful Moqbul
CEO & Managing :
Mr. Md. Obayed Ullah Al Masud
Director
Company Secretary :
Mr. A.K.M Sajedur Rahman Khan
Legal Status :
Public Limited Company
Genesis :
Emerged as Nationalised Commercial Bank in 1972,
following the Bangladesh Bank (Nationlisation)
Date of Incorporation : Order No. 1972 (PO No.26 of 1972)
03 June, 2007
Date of Vendor's :
15 November, 2007
Agreement
Registered Office :
35-42, 44 Motijheel Commercial Area, Dhaka,
Bangladesh
Authorised Capital :
Taka 6000.00 Crore
Paid-up Capital :

Taka 3830.00 Crore

Number of Employee :
22,446
Number of Branches :
1209
Phone-PABX :
9550426-31, 33, 34, 9552924
FAX :
88-02-9561410, 9552007
SWIFT :
BSONBDDH
Website :
www.sonalibank.com.bd
E-mail :
itd@sonalibank.com.bd
 P a g e | 38

Chapter-6: Foreign Remittance in

Sonali Bank Ltd (Procedure)
 P a g e | 39

6.1 Foreign Remittance Procedure of SBL

According to the Foreign Exchange Regulation Act, 1947 and guidelines for Foreign Exchange
Transactions, Bangladesh Bank has classified all foreign remittances into two broad categories:
1. Inward remittance
2. Outward remittance

6.2 Inward Remittance

Inward remittance takes place when our country receives remittance from foreign countries. In
details, foreign inward remittance means the remittance of freely convertible foreign currencies
that we receive from foreign countries against which the permitted dealers make payment in
local currency to the beneficiaries. The ways of receiving inward remittances are draft, mail
transfer, TT, export bills, travelers’ cheques and foreign bills. A local bank receives specific
commission for providing inward remittance service.

The Inward remittance amounts of last 5 years of Sonali Bank Ltd are mentioned below:

Graph 08: Inward remittance flow from 2011 to 2015

Inward Remittance

13286.21
12765.23
12479.79
11686.57

10153.83
TK in croe

2015 2014 2013 2012 2011

Year

Source: Annual reports of Sonali Bank Ltd from 2011-2015

 P a g e | 40

Table 02: Charges of SBL on Inward Remittance Services

Serial Number Services Charges

01 Collection of foreign cheques/drafts Com : TK 200/
P&T : At actual min TK
100/-
FCC : At actual
02 Purchase of cheques/drafts/TCs drawn Com : @ 1.00%
on abroad (with the approval of HO) P&T :TK200l-
FCC : At actual
03 Foreign TT payment including advance Free.
payment against export
04 Encashment of cash foreign currency TK 200 up to US$ 10,000
TK 300 above US$ 10,000
Source: schedule_of_charges_ITFD_2014.pdf from
(sonalibank.com.bd/PDF_file/citizen_charter/services_directory_sbl_2016.pdf)

6.2.1 Purpose of Inward Remittance

Remittances are being sent from abroad for the following purposes:-
➢ Family maintenance
➢ Indenting Commission
➢ Recruiting Agents Commission
➢ Realization of Export Proceeds
➢ Donation
➢ Gift
➢ Export broker’s Commission etc.

6.2.2 Source of Inward Remittance:

The ways through which remittance comes in our country are mentioned below:
➢ Expatriate Bangladeshis.
➢ Exporters.
➢ Visitors.
 P a g e | 41

6.2.3 Bangladesh Bank Restrictions on Inward Remittance:

➢ Any amount can be sent as remittance by the remitters.

➢ The beneficiary must fill and sign in Form ‘C’ (Appendix 5/6) for above
US$5000 mentioning the purpose of remittance.

➢ If any incoming passenger bring more than US $5000, the fact must be declared
to the custom.

➢ The remittance is for gift, donation, permission to be obtained from respective

ministry/authority.

All banks have to report to Bangladesh Bank about total foreign exchanges of each month on
inward remittances through statements along with schedules before a stipulated date.

6.2.4 Role of Exchange Houses in foreign Inward remittance:

Exchange houses offer a wide range of services from Demand Drafts (DD) to instant credit
facilities. They facilitate easy access for customers by delivering products. Exchange houses are
extensively used for remittances from UAE. Unlike the banking channel this channel is based
on Vostro accounts I.e. accounts maintained by exchange houses with various banks in
beneficiary countries. These accounts are prefunded by exchange houses.

6.2.5 List of Exchange Houses:

The list of exchange houses of Sonali Bank Ltd has been mentioned below with their
geographical position. At present total number of exchange houses of Sonali Bank Ltd is 54
(Bank 12 and Exchange houses 42)

Table 03: List of exchange houses.

Name of exchange houses/bank. Geographical location
1 Bahrain Financing Company
2 Dalil Exchange
3 Zenj Exchange Co. W.L.L. Bahrain
4 Nationa Finance Exchange CO,
Bahrain
5 Hamdan Exchange

6 Daulat Enterprise Inc. Canada

 P a g e | 42

7 Al-rajhi Bank
8 Al Rajhi Commercial Foreign Exchange
9 Bank Al-Jazira , K.S.A.
10 Al Amoudi Exchange Company
11 National Commercial Bank K.S.A.
12 Arab National Bank
13 Bank Al Bilad
14 Al. Jamil Exchange Co.

15 Al Mulla International Exchange Co. W.L.L.

16 Al Muzaini Exchange Co. K.S.C.C.
17 Al Moosa Exchange Company W.L.L.
18 Bahrain Exchange Company W.L.L
19 City International Exchange Co. W.L.L.
20 Dollarco Exchange Co. Ltd.
21 Kuwait Bahrain International Ex. Co. W.L.L. Kuwait
22 National Money Exchange Co. W.L.L.
23 Oman Exchange Company Ltd.
24 U.A.E. Exchange Centre W.L.L.
25 May Bank
26 Ime (M) Sdn.Bhd Malaysia
27 Nbl Sdn Malaysia

28 Bank Muscat S.A.O.G.)

29 Gulf Overseas Exchange Co. L.L.C.
30 National Bank Of Oman
31 Oman International Exchange L.L.C. Oman
32 Oman & Uae Exchange Centre & Co. L.L.C.

33 Eastern Exchange Eastablishment

35 Trust Exchange Company W.L.L. Qatar
36 Al Dar For Exchange Works
37 Arabian Exchange

38 Indian Bank Singapore

39 Balaka Exchange Pte Ltd

40 Eastern Union Remittance & Exchange Ltd. U.K.

41 British Arab Commercial Bank

42 Al Ansari Exchange
43 Habib Exchange Co. L.L.C.
44 Mashreq Bank Psc
45 Al Rostamani International ExchangeCompany
 P a g e | 43

43 U.A.E. Exchange Centre L.L.C. U.A.E.

46 Wall Street Exchange Centre L.L.C.
47 Ridha Al Ansari Exchange Establishment
48 Al Ahalia Money Exchange Bureau
49 Lari Exchange Establishment
50 Al Falah Exchange
51 Al Ghurair Exchange

52 Global Exchange Italia Srl, Italy Italy

53 Trans-Fast Remittance L.L.C. Usa

54 Western Union France

Source: sonalibank.com.bd/PDF_file/all_exchange_house.pdf
6.3 Outward Remittance:
Outward foreign remittance occurs when our country remits currency to foreign countries. In
details, Outward remittance means selling of foreign currency by the authorized dealers or
formal channels. It must be assured by the authorized dealers that foreign currencies are
remitted and used only for the right purpose. Outward remittance can be done by appropriate
method to the country to which remittance facility is authorized by Bangladesh Bank.

The Outward remittance amounts of last 5 years of Sonali Bank Ltd are mentioned below:
Table 09: Outward remittance of SBL from 2011 to 2015

Outwar Remittance

1264.23

1085.15 1052.36
1002.62

TK in
Crore

616.64

2015 2014 2013 2012 2011

Year

Source: Annual reports of Sonali Bank Ltd from 2011-2015

 P a g e | 44

Table 04: Charges of SBL on Outward Remittance Services

Serial no Services Charges
01 Issuance of Drafts drawn on abroad Com :TK 2001-
SWIFT: TK 1,000/-
P&T : TK 100/ (if required)
02 Issuance of FDD drawn on BB from FCRQ A/C Com : TK 1,000i-
SWIFT: TK 500/- (if
required)
03 Issuance of FDD drawn on BB from FC Com US$ 5.00
A/C
04 Charges for issuance of counter draft in Com : TK 2001
favor of other local banks against P&T :TK 100/-
remittance SWIFT : TK 500/-(if
required)
05 Issuance of TT in FC Com : TK 2001-
SWIFT: TK 1.000/-
06 Cancellation of drafts/TT in FC Com :TK 2001-
SWIFT:TK 1,000/-
P&T : TK 100/- (if required)
07 Issuance of duplicate drafts drawn on Com : TK 2001-
abroad SWIFT: TK 1,000/-
P&T : TK 100/- (if required)
08 Passport endorsement TK200l- per passport
09 Processing of student file for education New :TK 3,000/-
abroad Renewal: TK 1,000/-
Source: schedule_of_charges_ITFD_2014.pdf from
(sonalibank.com.bd/PDF_file/citizen_charter/services_directory_sbl_2016.pdf)

6.3.1 Purpose of Outward Remittance:

➢To settle Import Payment.
➢ To meet Travel Expenses/Medical Expenses/Educational Expenses etc.
6.3.2 Different Types of Outward Remittances:
A) Private Remittance
B) Official & Business Travel related Remittance
C) Commercial Remittance

A) Private Remittance:
➢ Family remittance facility:
Expatriates working in Bangladesh with the approval of the Government Bangladeshi
migrant worker can remit 75% of their net income through an Authorized Dealer (to the
country of their origin). They can also remit 100% of their leave salary as savings and
pension benefits, without the prior approval of Bangladesh Bank. Here net income
indicates the gross income of the applicant less all mandatory deductions of income tax,
 P a g e | 45

provident fund and pension fund, house rent and others of a fixed nature. (FE Circular
No.06, April 15, 2013)

Moderate amounts of remittance for maintaining family members of abroad (spouse,

children, parents) are permitted by BB on written request supported by
certificates/required documents from the related country.

➢ Membership fee and registration fee:

Authorized Dealer (AD) may remit for membership fee and registration fee to
professional/scientific institutions without prior approval of Bangladesh Bank. They can
also remit fees for application, registration, admission, examination (TOEFL, SAT etc.)
so that students can admit into foreign educational institutions on the basis of written
application from the related foreign institution showing the amount that will be remitted.
Such remittances should be paid directly to the related institution through draft/TT etc.
and the transaction should be reported to the BB backed by Form TM in the usual
monthly return.

➢ Education:
Bangladesh Bank approval is required to release foreign exchange for the students at
school level in foreign countries to support their education expenditures. Besides, ADs
can release remittances for Bangladesh students to admit and study in regular courses.
Undergraduate, post graduate and language courses are pre-requisite for bachelor degree
& professional diploma/certificate in recognized institutions in foreign countries subject
to verification of bona fides according to the following conditions.

✓ Application duly filled in;

✓behalf ofThetheeducational institution issue original and photocopy of admission letter on
student (such as US institutions require I-20);
✓ The concerned educational institution issue original and photocopy of estimated
annual tuition fee, board and lodging, incidental expenses etc.
✓ The applicant need to attest copies of educational certificates.
✓ Valid passport is required.
✓more than
The facility of purchasing of foreign exchange/remittance will not be allowed for
one academic year at a time;
✓ The current progress report and current estimated costs of the educational institution
should be taken into consideration for releasing of foreign exchange subsequent each time.
✓ The ADs will keep individual file for each student with all relevant papers in
readiness for inspection of BB officials.
 P a g e | 46

➢ Remittance of consular fees:

Foreign embassies in Bangladesh collect consular fees and deposit in a Taka Account
maintained with an AD for remitting consular fees to foreign countries without prior
approval of Bangladesh Bank. The AD needs to submit report of such remittance in the
usual monthly returns along with the relevant TM Form to Bangladesh Bank.

➢ Travel:
Bangladeshi adult nationals can visit to SAARC member countries and Myanmar and
other countries under the annual travel quota contract at maximum $5000 or equivalent
$7000 respectively during a calendar year. The minors (below 12 years age) can avail the
facility of applicable quota for half amount than adults’ fee. But, cash amount in foreign
exchange must not surpass $3000 per person for per trip.

ADs should ensure the following conditions at the time of releasing foreign exchange for travel
purposes:
✓ The willing traveler is a client of Authorized Dealer bank (AD bank)
✓ The willing traveler is well known to the authorized dealer bank.
✓ The AD bank must be satisfied about the authenticity of the application;
✓ The willing traveler must possess a confirmed air ticket (if needed) for the journey;
✓ The released amount is endorsed on the passport and air ticket of the traveller
with irremovable ink, signature and name of the authorized dealer branch inscribed in
the passport and ticket.

➢ Health/Medical
Without prior approval of Bangladesh Bank, ADs may release up to $ 10,000 as
remittance for medical treatment in foreign countries on the basis of the recommendation
of the medical board/specialist fixed by the Health Directorate and the cost estimation of
the foreign medical institutions. The AD must submit documents to BB (foreign
exchange operation dept.) if the releasing amount of remittance exceeding $10000 to
support treatment in foreign countries. And the supporting documents will be verified by
Bangladesh Bank to justify the authenticity of the expenses.

➢ Seminars and workshops:

ADs may release remittance to the participants of private sectors up to $200 per day for
SAARC member countries or Myanmar and $250 per day for other countries without
prior approval of Bangladesh Bank.
 P a g e | 47

➢ Foreign nationals:
The ADs may issue Transaction Currency to foreign nationals limitlessly and foreign
currency notes up to $2000 per person against submitting of equal amounts in foreign
currencies. However, the TCs and foreign currency notes should be released only on
origin of a ticket for a country outside Bangladesh and the issued amount should be
endorsed on the concerned passports.

➢ Remittance for Hajj:

Each year Government of Bangladesh announces the scale at which foreign exchange
will be issued to willing pilgrims to perform Hajj. It should be ensured that release of
foreign exchange will be made as per instructions (issued by BB each year).

B) Official and Business Travel Related Remittance:

➢ Official visit:
Ads may release foreign exchange as per entitlements fixed by the MoF/related authority
from time to time for the officials of Government/Semi Government/Autonomous/Semi-
autonomous institutions etc. to visit abroad. In this regard, the application will be
required to submit to the Competent Authority for foreign exchange.

➢ Business travel for new exporters:

New exporters are allowed to carry up to $6,000 and ADs may issue this amount without
prior approval of Bangladesh Bank on the basis of the recommendation letter from EPB
(Export Promotion Bureau). Bangladesh Bank will grant more than $6000 requirements
after considering the applications submitted by ADs with supporting documents.

➢ Business travel quota for importers and non-exporters:

Importers carry business travel quota such as annual upper limit of $5000 and non-
exporting producers have a quota of 1% of their imports/turnover settled during the
previous year/declared in their tax returns.

➢ Retention Quota of Exporters:

Merchandise exporters may retain up to 50% of repatriated FOB (Free On Board) value
of their exports in foreign currency accounts (for garments exporters, the quota is 10%)
may use for business. Through this amount they can visit abroad, participate in export
fairs, attend at seminars, office maintenance abroad, import of raw materials.
 P a g e | 48

6.3.3 Bangladesh Bank Restrictions on Outward Remittance:

➢ An application on prescribed form must be submitted to an AD or Bangladesh
Bank wherever necessary for purchasing of foreign currency.

➢ The prescribed application form will be according to Form IMP (Appendix 5/11)
and for other types of remittances Form TM (Appendix 5/5, Chap.5, Sec.1, Para-2) for
payments against imports in to Bangladesh.

➢ Ads must use TM form for reporting even if the remittance is approved by
Bangladesh Bank in any other manner. For example: issuing a special permit.

➢ The ADs may affect the sale of foreign exchange if they have the empowerment
to approve the application after receiving receipt of the application in the prescribed
form.

➢ AD should forward the form to the Bangladesh Bank for consideration if the
transaction requires prior approval of the Bangladesh Bank.

6.4 Mode of Foreign Inward and Outward Remittance:

The following are the mode of Inward/Outward Remittances.

➢ TT (Telegraphic Transfer): An electronic method of transferring funds; it’s utilized

primarily for overseas wire transactions. These transfers are used most commonly in
reference to CHAPS (Clearing House Automated Payment System)

➢ MT (Mail Transfer): This mode is used when you wish to transfer money from
your account in Center 'A' to either your own account in Center 'B' or to somebody else's
account. In this mode of transfer, you are required to fill in an application form similar to
the one for DD, sign a charge slip or give a cheque for the amount to be transferred plus
exchange and collect a receipt.

➢ FD (Foreign Drafts): A bank draft which is drawn on a financial institution in the country
of currency. It can be purchased at commercial banks and usually have a fee depending
on the institution and the type of account you hold.

➢ PO (Payment Order): It refers to a directive to a bank or other financial institution from a

bank account holder instructing the bank to make a payment or series of payments to a
third party via paper and/or electronic means.

➢ TC (Travelers Cheque): A traveler's cheque is a medium of exchange that can be used in

place of hard currency.

➢ EFT (Electronic Fund Transfer): EFT is the electronic transfer of money from one bank
account to another, either within a single financial institution or across multiple
institutions, via computer-based systems, without the direct intervention of bank staff.
 P a g e | 49

Chapter-7: Foreign Remittance in

Sonali Bank Ltd (Process)
 P a g e | 50

7.1 Foreign Remittance Process of SBL

Remitting process refers to a process through which fund is transferred from one country to another
country. For example, a local bank has 300 domestic branches. The bank has corresponding
relationship with a foreign bank say “Global Bank”, and maintaining “Nostro Account” in US $
with the bank. Bangladeshi expatriates are sending foreign remittances to their local beneficiary
through that account. Now, when the Bangladeshi expatriates remit the money through other banks
of different countries to their “Nostro Account” with “Global Bank”, then the international division
of Head Office of the local bank will receive telex message and the remittance section of the local
bank will record the advice and originate the advice letter to the respective branch of the bank. The
branch will first decode the test, verify signature and check the account number and name of the
beneficiary. The branch transfers the amount to the account of the beneficiary after being fully
satisfied and intimates the beneficiary accordingly. But sometimes the complexity arises, if the
respective local bank has no branch where the beneficiary maintains his account. Then the local
bank has to take help of a third bank who has branch there.

7.1.2 Formal Channel:

Fund transfer from one country to another country through official channels, i.e. banking
channel, post office, and other private service channels, such as- Western money order, Neno
money order etc.
The legitimate purposes for moving money abroad through formal channel are
➢ To invest
➢ To lend
➢ To meet trading/ Personal obligation
➢ To safeguard assets against theft or seizure by repressive regimes.

7.1.3 Informal Channel:

It’s an unofficial channel for fund transferring from one country to another country through
hand or over telephone such as “Hundy”. Haque (1992) remarked that remittance collected by
informal “Hundy” rings operating in Middle East counties and UK are also used to finance
illegal trade and transactions.
Islam (2000) observes that as informal channel is needed for illegal trade of goods, as well as
gold and drug into Bangladesh, and therefore, helping the ever-present problem of capital flight
out of Bangladesh.
 P a g e | 51

The reasons behind using informal channel for moving money from abroad are as follows :-

➢ The majority of the Bangladeshi remitters are unskilled labourers. As these

labourers are poorly educated, they often prefer informal channels to avert difficulties
in formal channel.
➢ Costs of informal channels are about 45 percent of formal costs.

➢ Highly trust based, inexpensive, speedy, accessible and a convenient way of

transferring funds.
➢ Strong incentive to use IMTS if the official exchange rate is overvalued.

➢ The weaknesses in conventional financial systems, such as high costs, poor or

unavailable service and lack of access
➢ Dealing in arms & ammunition
➢ Drug trafficking
➢ Financial terrorist activities
➢ Evasion of exchange regulations/ control
➢ Evasion of taxation
➢ Disguise or remove proceeds of threat/ fraud/ bribe
➢ Making blackmail payments
➢ Paying ransom for kidnappers.
7.2 Disadvantages of informal channel of remittance:

➢ Financial inclusion is not extended.

➢ Contribution to GDP decreases.
➢ Contribution to banking sector decreases.
➢ Per Capita income is not actually represented due to informal remittance transactions.
7.3 Bangladesh Bank initiatives to bring more remittances in formal channels:

➢ Allowing banks to tie up with NGOs to render faster delivery of

remittances to beneficiaries.
➢ Automated banking payment system has been launched to provide better
services to clients.
➢ Attracting new entrants, including new banks, card companies such as VISA and
various entrepreneurs and non- government organizations (NGOs) to provide remittance
facility to make the remittance market competitive.
➢ Increasing the number of exchange houses to receive more remittance in formal channel.
➢ Sending remittance over mobile phone ( currently launched by Bkash) to home country.
 P a g e | 52

Chapter-8: Foreign Remittance

System in Sonali Bank Ltd.
 P a g e | 53

8.1 Remittance Management System (RMS)

Remittance Management System is a customized process of Sonali Bank Limited. This system is
totally owned by SBL where foreign remittance are processed. Primarily bank collects the
remittance from the 54 exchange houses of different foreign countries. This exchange house
collect money from the customers and then send information about the customers to the bank.
There are two processes for sending the information to the bank.
1. EFT ( Electronic Fund Transfer)
2. SWIFT ( Society for Worldwide Interbank Fund Telecommunication)

After obtaining data the bank processes the data with the assistance of a customized software
which is prepared for processing data. This software is called Remittance Management System
plus (RMS+) software. Some high quality, energetic, IT specialist and dynamic young group of
employees are engaged to ensure the faster and smother service to the customers.
The exchange house collect information from the customer’s regarding their:-
➢ PON (Payment Order No)
➢ Date
➢ Beneficiary Name
➢ Account Name
➢ Amount
➢ Remitter Name
➢ Beneficiary Branch Name etc.

The bank has installed RMS+ software at Wage Earner’s Corporate Branch (WECB), Dhaka.
The incoming remittances are downloaded and processed at WECB using RMS.
RMS accepts various structured remittances from various exchange companies and alters it into a
unique structure and install a security. RMS+ receives an administrative password after receiving
the remittances, a part-1 test key holder password, a part-2 test key holder password and two
signatures activation password daily. There are 20 (Twenty) parameterized signature in RMS+.
The bank can change the signature per day. Automated secured test key module has been
preserved in RMS. So a test key is automatically created by RMS for every amount. The TRA
data of various exchange company are amassed to induct three types of security and to affirm
using RMS Data Center for live outlets.
Incoming remittance data packet is received by the RMS module of outlets and then the outlets’
RMS module validates it. The TRA automatically prints with two signatures and a test number
and an authorized signatory of outlets sign on TRA as third signature and give away it after
validation process. Distance located TRA is initially distributed over phone and put a seal on
TRA as “credit over phone”.
The outlet collect the credit date of TRA from branches and sends a feedback file to WECB. This
feedback is used for Reconciliation and overseas exchange company/Bank.
 P a g e | 54

8.2 Advantages of RMS:

➢ Transferring money onto customers’ accounts over online.

➢ Sending messages automatically on mobile of receiver/sender at the time of reaching
money at the branch of expatriate.
➢ Providing cash money that has been sent from abroad at spot cash system in spite of
not having an account by the receiver.
➢ Remittance money from one branch of Sonali Bank to another branch over online
TT/DD/MT.

8.3 Features of RMS (Remittance Management System) for Middle East

Remittance

➢ Credit beneficiary Account within 8-24 Hours.

➢ Auto TRA issue
➢ Auto Test Number for any amount (Parameterized)
➢ Auto Signature (Parameterized)
➢ Highly secured data transmission
➢ Auto Feed Back
➢ Data Ready for Reconciliation
➢ Unique platform for all exchange company
➢ Consolidated Data packet for all overseas exchange/Bank
➢ Missing data packet traceable by outlet software
➢ Single Copy instrument print
➢ Additional instrument copy prints with “Care Duplicate”.
➢ Generate all types of required statements
➢ 100% parameterized Software
➢ Only local TRA prints at WECB (Wage Earner’s Corp Br)
 P a g e | 55

Chapter-9: Foreign Remittance in

Sonali Bank Ltd (Performance
measurement and Analysis)
 P a g e | 56

9.1 Performance Measurement of Sonali Bank Ltd

Remittance of Sonali Bank Ltd in comparison with total remittance in terms of percentage.
Table 10: Remittance flow of SBL from 2005 to 2015 (percentage of total remittance)

Remittance Flow of SBL

(% of total remittance)

35.5
32.32

Percentage
15.21
14.29 24.53
13.28
11.92 11.84
11.17 11.39
19.14

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
Year

Source: Annual report of Sonali Bank Ltd, 2015 &

http://www.theglobaleconomy.com/Bangladesh/Remittances/

To measure the performance of Sonali Bank Ltd in terms of remittance we determine the SBL’s
remittance to percentage of total remittance. Average US $1 value in BDT are taken from
Annual reports of Sonali Bank to convert Dollar into BDT.

Last 10 years (2005-2015) data are represented to understand the actual performance of Sonali Bank
Ltd in terms of remittance. We see that the percentage SBL’s remittance in total foreign remittance is
in decreasing trends from 2005 to 2015. From the above table we can see that there is ups and downs
in remittance flow of Sonali Bank from 2005-2015. Sonali Bank received highest remittance in 2013.
We can also consider the Sonali Bank remittance in proportion to the percentage of total remittance.
In 2016, the percentage was 35.50 of total remittance. But from that year the percentage has been
gradually decreasing year by year and which not good for the bank.
 P a g e | 57

At present Sonali Bank holds 11.37% of total remittance in 2015. As a largest commercial state
owned bank it should receive more remittance in proportion of total remittance.

There are many reasons behind this downturns in the percentage of total remittance. I will
analyze the segment and will describe the reasons behind this downturns.

9.2 Analysis and Findings:

Sonali Bank remittance flow in percentage of total remittance has been decreasing due to some
reasons. The following reasons are mainly liable for decreasing the performance of Sonali Bank
in terms of receiving remittance:

➢ Many newly emerged private commercial banks are receiving remittance from
foreign countries.
➢ Inefficiency of remittance unit of Sonali Bank Ltd.
➢ Late payment of remittance amount to the beneficiaries.
➢ Less careful about the remittance services..
➢ Higher cost of remitting money by the expatriates.
➢ Providing lower quality of remittance services.
➢money through
Internal corruption news of Sonali Bank discourages the expatriates to send
SBL.
➢becauseIlliterate family members are unwilling to go to bank to receive remittance
they think it’s burdensome than informal channel.
➢bankingInsystem.
informal channel the family members of migrant receives more money than the

➢throughInhundi
rural area people feel insecure to go to banks rather they receive remittance
(a most popular informal channel)
➢remittance
Majority of migrants are unskilled and uneducated and so they fear to send
through bank by facing deficulties.
 P a g e | 58

Chapter-10: Problems,
recommendation and Conclusion
 P a g e | 59

10.1 Problems of Sonali Bank Ltd in Remittance Management System:

There are many problems in Sonali Bank remittance management system and these are affecting
the smooth and profitable operation of remittance activities. The problems are mentioned below:

➢ Lack of efficient employees.

➢ Lack of better internet facility.
➢ Lack of effective management system.
➢ Lack of data processing system.
➢ Lack of IT specialized.
➢ Lack of security.
➢ Lack of proper monitoring activities.
➢ Lack of reporting in timely manner.
➢ Vulnerable software with having bugs.
➢ Sometimes the central sever gets too slow that data base system does not work.
➢ Old technological devices disturbs and gets hanged frequently
➢for looking
Employees in remittance unit of the bank face the problems of eye burn and headache
at monitor for a long time

10.2 Recommendation:
As the remittance unit of Sonali Bank Ltd is playing a vital role to our economy and financial
development. So the bank need to improve its remittance receiving facility. They need to recruit
specialized and qualified employees for remittance unit. They need to upgrade their devices
through which they perform remittance operations. They need to improve their central server
capacity and also improve the data base management system so that the server does not get slow
at the time working. They should ensure the security of the RMS+ (software) and also solve the
lagging and bugs problems of the software. Charging less for proving remittance facility in
comparison to other banks. They should use the back cover screen on the monitor of computers
so that employees do not face the problem of eye burn and headache. They should make the
payment of remittance amount as early as possible.

10.3 Conclusion:
In the internship period I have learnt about the operations of remittance unit of Sonali Bank Ltd. As a
largest state owned commercial bank, Sonali Bank Ltd has been receiving huge amount of
remittance. But the amount of remittance receiving by the bank has not been expectedly increasing
year by year because of their some weaknesses. The bank can contribute more to the economy of our
country as well as financial development in terms of remittance. The bank can raise its profit by
receiving higher remittance. The bank need to provide better remittance facility so that they can
Receive higher remittance comparatively than other banks in Bangladesh. Moreover the bank must
show excellence in remittance area to successfully compete with other govt. and private banks.
 P a g e | 60

Chapter-11: References,
Appendix and Internship Diary
 P a g e | 61

11.1 References:

Annual report of Sonali Bank – 2015

Annual report of Sonali Bank – 2014
Annual report of Sonali Bank - 2013
Annual report of Sonali Bank - 2012
Annual report of Sonali Bank - 2011
Ahmed, H. A., & Uddin, M. G. S. (2009). Export, imports, remittance and growth in Bangladesh:
An empirical analysis. Trade and Development review, 2(2).

Akter, S. (2016). Remittance Inflows and Its Contribution to the Economic Growth of Bangladesh.

Afsar, R. (2003, June 22-24). Internal migration and the development Nexus: The case of
Bangladesh. Paper presented at the Conference on Migration. Development, and Pro-poor
Policy Choices in Asia. Dhaka. Retrieved from; http://www.livelihoods.org/hot
topics/docs/dhaka_cp_6.pdf.
Barua, S. (2007). Determinants of workers’ remittances in Bangladesh: An empirical study.

Chowdhury, M. B. (2011). Remittances flow and financial development in Bangladesh.

Economic Modelling, 28(6), 2600-2608.

Chowdhury, M. B. (2011). Remittances flow and financial development. In Proceedings of the

Western Economic Association International 9th Biennial Pacific Rim Conference, 26-29 April
2011, Brisbane, Australia.

Datta, K., & Sarkar, B. Remittances and economic growth in Bangladesh: An ARDL co-
integration approach.

Foundations of Financial Management by Stanly B. Block and Geoffrey A. Hirt. 11th edition,
ISBN-13: 978-0072842296.

Haider, M. Z., Hossain, T., & Siddiqui, O. I. (2016). Impact of remittance on consumption
and savings behavior in rural areas of Bangladesh. Journal of Business, 1(4), 25-34.

International Banking, Banking Theory, and Banking System by A. N. Sachdeva and M. P.

Sundaram, Prokashan Kendra, Lucknow.

International Remittance Payments and the Global Economy (Routledge Studies in the Modern
World Economy) 1st Edition by Bharati Basu and James T. Bang, ISBN-13: 978-0415589949.
Islam, M. N. (2011). Bangladesh Expatriate Workers and their Contribution to National
Development.
 P a g e | 62

Migration and Remittances Factbook, World Bank, 2016

Mamun, K. A., & Nath, H. K. (2010). Workers' migration and remittances in Bangladesh.
Journal of Business Strategies, 27(1), 29.

Mannan, K. A., & Farhana, K. M. (2014). Socio-economic impact of remittances in rural

Bangladesh: A unit analysis of the age of household head.

Mahmud, A. S. (2012). determinants behind the use of informal channels for remitting money from
overseas by the wage earners of bangladesh (Doctoral dissertation, Asian Institute of Technology).

Migration and Remittances Factbook, April, 2016: Third Edition, ISBN: 978-1-4648-0319-2.

Masuduzzaman, M. (2014). Workers’ remittance inflow, financial development and economic

growth: A study on Bangladesh. International Journal of Economics and Finance, 6(8), 247.

Muzib, M. M., Liton, M. R. I., Sadekin, M. N., & Mahmud, M. A. L. (2014). The Target and
Achievements of Private Sector Credit in Bangladesh: A Monetary Policy Analysis. Global
Disclosure of Economics and Business, 3(2), 175-184.

Puri, S., & Ritzema, T. (1999). Migrant worker remittances, micro-finance and the informal
economy: prospects and issues. International Labor Office.
Remittances: Development Impact and Future Prospects by Samuel Munzele Maimbo and Dilip
Ratha, ISBN-13: 978-0821357941
Rahim, S. A., & Alam, M. A. (2015). Foreign remittance income in Bangladesh: Opportunities
and challenges. Asian Business Review, 2(2), 22-28.

Raihan, S., Sugiyarto, G., Bazlul, H. K., & Jha, S. (2009). Remittances and household welfare:
A case study of Bangladesh.

Raihan, S., Sugiyarto, G., Bazlul, H. K., & Jha, S. (2009). Remittances and household welfare: A
case study of Bangladesh.

Siddiqui, T. (2004). Efficiency of migrant workers’ remittance: the Bangladesh case. University
of Dhaka.

Siddiqui, T., & Abrar, C. R. (2003). Migrant worker remittances and micro-finance in
Bangladesh. Prepared for Social Finance Programme, Working paper, (38).

Website list:
 P a g e | 63

➢ sonalibank.com.bd
➢ theglobaleconomy.com/Bangladesh/Remittances/
➢ bmet.gov.bd/BMET/downloadAction
➢ bb.org.bd/econdata/wageremitance.php
➢ bmet.gov.bd/BMET/viewStatReport.action?reportnumber=20
11.2 Appendix:
Country US $ Millions Percentage (%)
K.S.A. 2955.55 19.79
U.A.E. 2711.74 18.16
U.S.A. 2424.32 16.24
Malaysia 1337.14 8.96
Kuwait 1039.95 6.96
01 Country wise Oman 909.65 6.09
U.K. 863.28 5.78
Wage earners Bahrain 489.99 3.28
remittance Qatar 435.61 2.92
calculation and Singapore 387.24 2.59
percentage Italy 351.31 2.35
determination. Australia 69.15 0.46
S. Korea 64.78 0.43
Germany 25.89 0.17
Hongkong 25.65 0.17
Japan 22.09 0.15
Libya 12.34 0.08
Iran 0.17 0.00
Others 805.31 5.39
14931.16
Remittance GDP Percentage of
Year (Billion USD) (Billion USD) GDP (%)

2005 4.63 69.44 6.67

02 Remittance 2006 5.41 71.82 7.53

impact on GDP
(Total 2007 6.55 79.61 8.23
remittance/GDP 2008 8.93 91.63 9.75
*100)
2009 10.51 102.48 10.26

2010 10.84 115.28 9.40

2011 12.05 128.64 9.37

 P a g e | 64

2012 14.10 133.36 10.57

2013 13.85 149.99 9.23

2014 14.96 172.85 8.65

2015 15.80 195.08 7.73

Year Foreign Total Foreign Percentage of Averag

Remittance Remittance total remittance e US $1

of SBL (%)
2015 135649 1213970.88 11.17 79
2014 133819 1122267.75 11.92 75
2013 143386 1079971.62 13.28 78
03 Remittance 2012 126892 1114036.67 11.39 79
Flow of SBL
(% of total 2011 114181 964308.8 11.84 80
remittance) 2010 116105 812702.25 14.29 75
Data table 111879 735,534.10 15.21 70
2009
2008 116188 606922.44 19.14 68
2007 104501 425953.45 24.53 65
2006 113482 319641.94 35.50 59
2005 86797 268543.48 32.32 58

11.3 Internship Diary:

Date Description.
22-01-17 I have met AGM sir of Sonali Bank Ltd, Sonargao Road Branch.
I have learnt about the branch activities, number of employees and financial
condition and overall performance of that branch. He has referred me to a senior
officer. I have made an introductory discussion with the senior officer.

24-01-17 Knowing about their account opening procedure and the requirements for
opening main three types of accounts. And I have also opened a saving account.

25-01-17 Observing cheques endorsement and clearing procedures and cheques related
other matters.
 P a g e | 65

30-01-17 Observing the loan application form, the required papers which are asked to be
enclosed with the application form. Knowing about what types of loans they
provide and the collateral against which they provide loan.

01-02-17 Knowing about what they do if a loan becomes default then how they recover
the loan and if they can’t recover the loan amount then what they do.

05-02-17 Knowing about the investment activities such as where they invest, on which
sectors and how much they invest.
08-01-17 Observing the application for granting credit and debit card and come to know
who can avail these facilities and on what conditions and how much credit is
provided to customers’ credit card.
12-02-17 Observing many documents file about their administration.
15-02-17 Working on collection and payment of credit instruments like cheques, bill of
exchanges, drafts, promissory notes etc.
19-02-17 Knowing about how they provides utility services such as subscription, rents and
insurance premiums etc.
20-02-17 Discussing with AGM sir about their foreign remittance services and how much
foreign remittance the bank receives.
22-02-17 Collecting annual reports of Sonali Bank Ltd from 2013-2015 for obtaining more
information about the foreign remittance.
27-02-17 Knowing about the remittance procedure of the bank.

01-03-17 Learning about the process of receiving remittance by the bank

05-03-17 Knowing about the performance of the branch considering remittance and the
remittance unit of the branch.
07-03-17 Come to know about country-wise wage earners’ remittance and the name of
some major exchange houses.
13-03-17 Discussion about the impacts of remittance on our economy and social
conditions.
15-03-17 Learning about the RMS+ software words and the pros and cons of the software.

19-03-17 Coming to know about what the bank take to increase remittance flows.

22-03-17 Knowing about the relationship between remittance and perfect of the bank.