Executive Summary

The internship program is designed to bridge the gap between the theoretical knowledge & real
life experience. It is designed to have a practical experience while passing through the
theoretical understanding. The report is combination of three months internship program with
Agrani Bank Ltd.
The foreign exchange reserve, heavily contributed by remittance currency has crossed $10
billion and is continuing to grow fast. Since export earnings contribute less to this reserve it’s
the remittance that this country has to depend on.
Diverting remittance to formal economy requires channeling the remittance through formal
channel. The government is much concerned about the issue and thus trying to woo the financial
institutions help wage earner channel their money in a formal way.

Since the return of civilian regime in 1991, successive governments have undertaken various
proactive measures for encouraging the flow of remittance through official channel. Particularly,
when the 7th parliamentary government began its tenure, the foreign exchange reserve of the
country was as low as US $100 Million. The government first attempted to increase the reserve
through accessing foreign credit. However, due to unacceptable conditions set by the
international creditors, the government instead identified remittance as the potential source for
increasing the foreign exchange reserve. Ever since, government has been undertaking concrete
reform measures for increasing inflow of remittance through official channels.

Since beginning, the bank has been highly active in remittance operations to facilitate
disbursement of remittance received from Bangladeshi wage earners working abroad. Inward
foreign remittance also played a significant role in decreasing the bank’s dependency on inter
bank market for payment of import bills in foreign currency. The remittances of the Bank
resulted in steady increase of revenues for the bank in spite of the downward trend in
international trade. In the year 2009 the total remittance stood at Tk. 5,587 crore as against Tk.
5,269 crore in the year 2008. The Bank continues Taka Draft/ Electronics Fund Transfer
arrangements with a number of overseas exchange companies/banks. The Bank strengthened its
overseas network by operating through a total of 35 exchange companies/ banks, covering
middle east, the Gulf states, South-East Asia and Italy. Out of these 40 exchange
companies/banks, the has two subsidiaries of its own through which expatriates are remitting
their foreign earnings.

1
 INTRODUCTION
TO THE INTERNSHIP REPORT

Origin of the Report:

As a mandatory part the MBA Program, all the students of the faculty of Business Studies,
University of Dhaka have to undergo a three month long internship program with an objective of
gaining practical knowledge about current business world. After this internship program each
and every students have to submit an internship report mentioning their activities during the
internship program.

I’ve started my internship at the Agrani Bank ltd, Singair branch, Manikgonj on 02 May 2010
and at the end of the program I am submitting my internship report focusing on the efficiency
and performance overall remittance collection in Bangladesh in the competitive market.

Research Design:
Data collection: Both primary and secondary data is used for this report writing.
Primary Data: Most of the information was collected from primary sources. This
includes the interviews with the managers and officials of the bank.
Secondary Data: This includes a number of books, journals, handbooks, annual report
and websites.

Research Approach and Instrument: In this research informal questionnaire was used to
interview the bank officials instead of structured questionnaire. Observation and experience of
month long internship served as a major source of information.

Sample unit and sample size: Foreign remittance has been collected from earlier but spot
payment remittance are begun from August 2009 of Agrani Bank is taken as the sample unit and
the sample size includes all those remittance data.

Report Organization:
The report is organized as follows:

The initial part of the report includes the global & Bangladesh economy and overall
organization; which describes overall global and national situation, banking sector as
well as the history, background, operations & activities, financial conditions and the
products & services offered by the Agrani Bank at a glance.

The later part is the main project part, which includes five chapters describing theoretical
overview, practice in Agrani Bank, behavior analysis, recommendations regarding
remittance operation and overall profitability point of view.

2
 Chapter one
Introduction : Agrani Bank Ltd.

3
 A Brief Overview of Agrani Bank Limited

Agrani Bank Limited, a leading commercial bank with 867 outlets

strategically located in almost all the commercial areas throughout
Bangladesh, overseas Exchange Houses and hundreds of overseas
Correspondents, came into being as a Public Limited Company on May
17,2007 with a view to take over the business, assets, liabilities, rights and
obligations of the Agrani Bank which emerged as a nationalized commercial
bank in 1972 immediately after the emergence of Bangladesh as an
independent state. Agrani Bank Limited started functioning as a going
concern basis through a Vendors Agreement signed between the ministry of
finance, Government of the People's Republic of Bangladesh on behalf of the
former Agrani Bank and the Board of Directors of Agrani Bank Limited on
November 15,2007 with retrospective effect from 01 July,2007.

Agrani Bank Limited is governed by a Board of Directors consisting of

13(thirteen) members headed by a chairman. The Bank is headed by the
Managing Director & Chief Executive Officer; Managing Director is assisted
by Deputy Managing Directors and General Managers. The bank has 7 Circle
offices, 30 Divisions in head office, 52 zonal offices and 867 branches
including 10 corporate and 40 AD( authorized dealer) branches. The
corporate and AD branches are authorized to deal in Foreign exchange
business.

The authorized capital of the Bank is Tk. 800 crore.

4
1.1 OUR VISION
To become a leading bank of Bangladesh operating at international level of efficiency, quality
and customer service.

1.2 OUR MISSION

We operate ethically and fairly within the stringent framework set by our regulators. We fuse
ideas and lessons from best practice to explore new avenues to become stronger, more efficient
and competitive. We apply information and communication technology for the benefit of our
customers and employees. We invest to strengthen the future of the bank.

1.3 OUR MOTTO

To adopt and adapt to modern approaches to stand supreme in the banking arena of Bangladesh.

1.4 OUR VALUES

We values integrity, transparency, accountability and professionalism to provide a high standard
of service to all our customers and stakeholders.

FIVE YEARS PERFORMANCE AT A GLANCE

Balance sheet 2009 2008 2007 2006 2005

Authorized capital 800 800 800 800 800
Paid up capital 467 248 248 248 248
Reserves 139 74 16 15 15
Revaluation Reserve 207 43 0 15 19
Retained profit 74 277 70 -1810 -2008
Total Equity 917 642 334 -1532 -1726
Total deposits 16628 14681 13592 12892 13084
Core deposit 7357 7209 6001 5785 5201
Long term liabilities 15964 3980 10230 11006 6955
Total loans and advances 12224 11336 11849 10587 9940
Investment 4090 2933 2190 2231 2433
Fixed Assets 288 253 248 41 44
Net current Asset 4798 -6854 356 2130 2379
Operating Results
Total Income 1637 1498 1368 1233 1060
Total Expenditure 990 865 842 875 846
Net profit 111 265 86 194 163
EPS 22.31 106.52 34.56 0 0
Cost of fund in Percentage 6.86 6.65 6.68 6.84 6.95
Return on equity in 12.09 41.28 29.55 0 0
Percentage
Return on Assets in .52 1.41 .92 1.26 1.05
Percentage
Net interest margin 4.61 4.24 3.69 2.96 1.73
Percentage
Performing loan 11.04 10.38 10.35 9.53 7.94

Other key operational

Data

5
 Forex Business : 17801 21175 20516 20693 12747
i. Imports 7753 10952 11343 11592 5119
ii. Exports 4461 4954 4892 5171 4171
iii. Remittances 5587 5269 4281 3930 3457
Guarantee Business 160 112 105 108 118
Number of branches 867 867 866 866 864
Number of correspondent 39 39 39 38 41
banks with NOSTRO A/C
Number of Foreign 383 383 416 416 410
correspondents
Number of Remittance 33 29 28 25 25
correspondents
subsidiaries 2 2 2 2 1

1.5 Financial Highlights

(Amount crore taka)
Performance during the year 2009 2008 change
Interest revenue 1012.24 954.78 6.02%
Interest cost 608.36 524.14 16.07%
Net interest revenue 403.88 430.64 -6.21%
Income from revenue 369.02 185.43 99.01%
Other operating revenue 255.45 357.86 -28.62%
Total operating revenue 1028.35 973.93 5.59%
salary & allowances 305.11 271.40 12.42%
Other operating cost 78.80 69.55 13.30%
Total operating cost 383.91 340.95 126.60%
Profit before amortization, provision 644.44 632.97 1.81%
and tax
Amortization (valuation adjust) 132.95 132.95 ---
Provision for loans and advances 90.94 185.12 -50.88%
Other provision 94.78 25.85 266.65%
Profit before tax 325.77 289.05 12.70%
Provision for tax 214.92 24.43 779.74%
Net profit after tax 110.84 264.62 -58.11%

At the end of the year

Paid up capital 496.84 248.42 100.00%
Total shareholders equity 916.72 641.92 42.81%
Deposits 16628.36 14681.46 13.26%
Total contingent liabilities and 9297.36 4616.45 14.75%
commitments
Loans and advances 12223.60 11336.23 7.83%
Amount of classified loans 2373.93 2548.92 -6.87%
Provision kept against C. L 1056.06 1036.97 1.84%
Investments 4089.72 2932.98 39.44%
Average interest earning assets 14908.04 14384.53 3.64%
Non interest earning assets 4297.05 4235.62 3.81%
Fixed assets (Property, plant & 287.87 25.08 13.75%
equipment)
Total assets 21178.91 18732.57 13.06%

6
1.6 KEY RATIOS

Particulars

Profitability and performance ratios 2009 2008

1 Net profit ratio 6.77% 17.66%
2 Cost to income ratio 60.63% 57.75%
3 Efficiency ratio 0.37% 0.35%
4 Asset utilization 7.73% 8.00%
5 Return on assets 0.52% 1.41%
6 Leverage multiplier 23.10% 29.18%
7 Return on equity (before tax) 35.54% 45.03%
8 Return on equity (after tax) 12.09% 41.28%
9 Earnings power 70.39% 76.79%
10 Non interest expenses to total assets 1.81% 1.82%
11 Net non interest expenses to total assets 1.14% 1.08%
12 Interest margin to total assets 1.71% 2.30%
13 Interest margin to earning assets 2.71% 2.99%
14 Yield on earning assets 6.79% 6.64%
15 EPS 22.31% 106.52%
16 Net assets value per share 184.51% 258.40%
17 Total classified loans to total loans 19.42% 22.48%
18 Total classified loans to net loans 4.97% 7.61%
19 Cost of fund 6.86% 6.65%
20 Return on investment 9.02% 6.32%

Liquidity and solvency ratios

1 Current ratio 2.12% 0.51%
2 Cash flow liquidity ratio 0.33% 0.08%
3 Debt to total assets ratio 0.96% 0.97%
4 Long term debt to total capitalization 0.12% 0.25%
5 Liquid assets to earning assets 11.56% 10.24%
6 Loans & advances to deposit ratio 73.51% 77.21%
7 Loans & advances to total asset ratio 57.72% 60.52%
8 Provision to total Loans & advances 9.63% 10.11%

Dividend ratio
Stock dividend 10% 100%

Capital adequacy ratios

Capital adequacy ratio 10.80% 9.16%
1. Tier I capital 7.74% 7.74%
2. Tier II capital 3.06% 1.72%

Note : Since ABL is not a listed company, its market price per share is not available. So,
Price Earning ratio of the Bank could not be provided.

7
1.7 Board of Directors (Details Information)

               Name        Address

Dr. Khondoker Bazlul Professor & Chairman
Hoque Department of International Business,
Chairman University of Dhaka, Dhaka.
Res: 39/F, Isha Khan Road, Dhaka
University Campus, Dhaka-1000.  
Mobile: 01713035575

Mr. Ranjit Kumar Additional Secretary, Finance Division,

Chakraborty Budget-1,Ministry of Finance, Govt. of
Director Bangladesh, Bangladesh Secretariat,
  Dhaka.
Phone:7165290 (Off)
Mobile:01817059909

Mr. Shekhar Dutta Secretary, Moni Singh-Farhad Memorial

Director Trust,
3, Comrade Moni Singha Sarak, (21/2
Purana Paltan), Dhaka.
Res.: 20/51, Rupnagar R/A, Pallabi,
Mirpur, Dhaka-1216.
Phone: 9558988 (Off)
Mobile: 01715051779
Mr. Nagibul Islam Dipu 62/6, Purana Paltan Lane, Paltan
Director Plaza-3(H), Shantinagar, Dhaka-1217 .
  Phone:9347953, 7119467, 7123052
(Office)
Mobile : 01916822263,01711524007

Engr. Md. Abdus Sabur Engineer and Industrialist,

Director 20, Green Corner, Green Road,
Dhaka-1205.
Phone: 9552177,7123288 (Office),
Mobile: 01716005300

Barrister Zakir Ahammad Chairman, Indepth News of Bangladesh

Director (INB) Ltd.
12, Siddeswari Road, Neel Padma,
Flat- 4/A, Dhaka-1217
Mobile: 01817062344

8
Mr. Shahjada Mohiuddin Flat-A/4 (4th Floor), 19/A Lake circus,
Director Kalabagan, Dhanmondi, Dhaka.

Mobile: 01711148189, 01914875767

Mr. Abduz Jahir 87, Sagar Dighirpar, Sylhet.

Chowdhury (Sufian)  
Director

Mr. K.M.N. Manjurul Chief Editor & Managing Director,

Hoque Lablu Global News Agency,Meherba Plaza
Director 33,Topkhana Road (1st Floor),
Shabuj Chaya, Dhaka.
Phone: 9562300, 9555767 (Office),  
Mobile: 01819219292
Fax: 8802-9123418
Email: manjurul_link@yahoo.com

Mr. A.K.  Gulam Kibria, Chartered Accountants,

FCA G. Kibria & Co.
Director 24-25 Dilkusha C/A (5th Floor), Dhaka.
  Phone: 9568071,9553617
Mobile:01819213643

Mrs. Luna Shamsuddoha Chairman

Director Dohatec New Media
Doha House
43, Purana Paltan Line
Dhaka-l000
 
Phone: 8363507, 9348119
luna@dohatec.com
dohatec@bol-online.com

Flat No: 1/301, Eastern Rokeya Tower,

Mr. Syed Bazlul Karim,
98, Bara Mogbazar,
BPM
Ramna, Dhaka.
Director
Mobile: 01711529377

9
Mr. Syed Abdul Hamid Head Office, Motijheel, Dhaka-1000.
Managing Director & CEO Phone No. 7160805,7160834

1.8

10
 Chapter 2
Foreign Remittance

11
2.1 Definition of Foreign remittance :

Foreign remittance can be defined as ‘the purchase and sale of freely convertible foreign
currencies as admissible under Exchange Control Regulations of the country’.
A looser translation is the sending of money home while working in a foreign country.
Thousands of people are currently working and living in a country that is not their home, and
sending funds regularly back to their families in their home country.

2.2 There are two type of remittances:

1. Foreign Outward Remittance: The sending country, where the wage earner is located. The
sender uses a bank or foreign exchange company to send money to foreign country. Many of the
receiving banks have established remittance relationships with currency houses and banks in
other countries to better facilitate the flow of remittances into the country.
2. Foreign Inward Remittance: The receiving country, where the beneficiary resides. The bank
receives the money that has been sent from the sending person in the country in which the
money has been earned.

Remittances are the foreign currencies that migrants return to their origin country. If labor is
considered as export, than remittances are the payments for exporting labor.

‘Foreign remittance’ means purchase and sale of freely convertible foreign currencies as
admissible under Exchange Control Regulations of the country. Purchase of foreign currencies
constitutes inward foreign remittance and sale of foreign currencies constitutes outward foreign
remittance.

So we see that there are two types of Foreign Remittance:

  Foreign Inward Remittance
  Foreign Outward Remittance

 
Banks in Bangladesh, for example, MTBL (Mutual Trust Bank Ltd.) has established remittance
arrangements with a number of exchange houses to facilitate wage earners to remit their money
to Bangladesh. This bank has already been in operation with UAE Exchange Centre LLC, Wall
Street Exchange LLC, Trust Exchange, Route Asia Exchange, Instant Cash and Bangladesh
Money Transfer. MTBL have obtained permission from Bangladesh Bank to start operation with
Al Saad Exchange, First Solution Exchange, Al Ahalia Exchange Bureau and Federal Exchange.
The bank maintains correspondence with other 16 Exchange House which are Al Fadaral
Exchange, National Exchange, City Exchange, Future Exchange, Al Ghurair Exchange, Habib
Exchange, Al Ansari Exchange, Emirates India International Exchange, Instant Exchange,
Oman UAE Exchange, Modern Exchange, Purusuttam Kanji Exchange, Musandam Exchange,
Lasidas Tharia Exchange, Oman United Exchange and ICICI Bank. The extensive branch
network of these Exchange Houses has been largely helping Bangladeshi expatriates working in
the UAE, UK, Qatar, and Oman to transfer their funds speedily and efficiently through online
network. MTBL’s total foreign remittance volume was Tk. 2,671.53 million in 2006. MTBL is
exploring further avenues of remittance from other countries such as Saudi Arabia, Malaysia,
USA and Italy in the near future.

12
 
The Foreign Remittance department of MTBL Dilkusha Branch is equipped with a number of
foreign remittance facilities. Following are the types of foreign remittance facilities offered by
MTBL Dilkusha Branch.

 
  Issuance of Foreign Demand Draft (F.D.D)
  Issuance of travelers Cheques (T.C)
  Issuance of foreign T.T (Telegraphic Transfer)
  Disbursement of the cash of incoming F.T.T.
  Collection of F.D.D.

13
 Chapter 3
Remittance in Bangladesh Economy

14
3.1 Flow of Remittance
The Bangladesh Bank documents remittance flows to Bangladesh from all over the world. This
means it covers remittance of both long term and short term migrants. Bank data shows that the
remittances sent by the migrants have grown over time. It has increased from a paltry figure of
US$ 23.71m in 1976 to more than US$ 3b in 2002-03 fiscal year(Table 5). Nonetheless, the
yearly growth rate of remittance is much less than the growth rate of the total number of migrant
workers.6 Throughout the last twenty-five years, the remittance flows broadly indicate an
average yearly increase of around 10 percent. The most important reason behind such gap in
migrant and remittance flows is that in recent times Bangladesh has exported more unskilled and
semi-skilled migrants whose wages are rather low compared to those of previous skilled and
professional ones. Wage rates have also fallen drastically over the past decade (Siddiqui and
Abrar, 2003).

annual quantities of remittances per sending country. One half of the total remittance came from
one country, i.e., Saudi Arabia. Over the years, the US has become the second largest remittance
sendingcountry, Kuwait and the UAE being the third and fourth. Migrants use different methods
in sending remittance involving both official and unofficial channels. A section of remittance is
also transferred in kind. The goods that migrants bring along while visiting or returning to
Bangladesh, or send with acquaintances can be termed as remittance in kind. Siddiqui and Abrar
in a study (2003), calculated remittances received in kind by 100 families in two regions of
Bangladesh7. Table 6 shows the number of goods received by the migrant families as remittance
in kind and their estimated value. When added with the total sum sent in Taka, this value
increased the total remittance of these families by another 9.21%.

3.2 Contribution of Remittance to the National Economy

Labour migration plays a vital role in the economy of Bangladesh. Bangladesh has a very
narrow export base. Readymade garments, frozen fish, jute, leather and tea are the five groups of
items that account for fourfifths of its export earnings. Currently, garments manufacturing is
treated as the highest foreign exchange earning sector of the country (US $ 4.583 billion in
2003). However, if the cost of import of raw material is adjusted, then the net earning from
migrant workers’ remittances is higher than that of the garments sector. In 2003, net export
earning from RMG should be between US$2.29-2.52 billion, whereas the earning from
remittance is net US$3.063 billion. In fact, since the 1980s, contrary to the popular belief,
remittances sent by the migrants played a much greater role in sustaining the economy of
Bangladesh than the garments sector.8 For the last two decades, remittances have been at levels
of around 35% of export earnings, making it the single largest source of foreign currency earner
for the country.

This has been used in financing the import of capital goods and raw materials or industrial
development. In the year 1998-99, 22 percent of the official import bill was financed by
remittances (Afsar, 2000; Murshed, 2000 and Khan, 2003). The steady flow of remittances has
resolved the foreign exchange constraints, improved the balance of payments, and helped
increase the supply of national savings (Quibria 1986). Remittances also constituted a very
important source of the country’s development budget. In certain years in the 1990s remittances’
contribution rose to more than 50 percent of the country’s development budget. Government of
Bangladesh treats Foreign aid (concessional loan and grants) as an important resource was twice
that of foreign aid. Remittances have played a major role in reducing the extent of the country’s
dependence on foreign aid.

15
The contribution of remittance to GDP has also grown from a meagre 1 percent in 1977-1978 to
5.2 percent in 1982-83. During the 1990s the ratio hovered around 4 percent. However if one
takes into account the unofficial flow of remittances, its contribution to GDP would certainly be
much higher. Murshed (2000) finds that an increase in remittance by Taka 1 would result in an
increase in national income by Tk 3.33. Following the expiry of multi-fiber agreement (MFA),
Bangladesh will face steep competition in export of RMG. The country will cease to enjoy any
special quota. It is apprehended that Bangladesh’s RMG export will decline sharply. This will
result in loss of job of many workers and shortfall in foreign exchange earning. Potential of
retaining employment and export earning through export of frozen fish, jute, leather and tea
seems rather bleak. It is in this context labour migration has become key sector for earning
foreign exchange and creating opportunities for employment. Therefore, the importance of
migrant remittance to the economy of Bangladesh can hardly be over emphasized.

3.3 Methods of Transfer

Migrants use different methods in sending remittance involving both official and unofficial
channels. Officially, transfer of remittance takes place through demand draft issued by a bank or
an exchange house; travelers’ checks; telegraphic transfer; postal order; account to account
transfer; automatic teller machine (ATM) facilities; electronic transfer and in kind. When
remittances are transferred directly from the foreign account of migrant worker to his own
account at home it is known as direct transfer. This can be through telegraphic means or
otherwise. Remittances are frequently sent through demand draft in Taka issued by a bank or an
exchange house in favour of a nominee of migrant. Usually the draft is sent by post, or in
emergency by courier service. One can send remittance through the postal authorities. In such
case the remitted money is handed over to the receiver by the local post office. Travellers’
cheques are also used as a means to send remittance.

However they will be treated as official transaction when they are encashed through banks.
While coming from abroad one can bring in foreign currency. If the amount is more than
US$5000 one has to declare at customs by filling up the FMJ form. Migrants can also send
remittance to their Non-resident Taka and Non-resident foreign currency accounts9. Hundi/
Money Courier is the most common among the unofficial channels of transfer. Hundi refers to
illegal transfer of resource outside the international or national legal foreign currency transfer
framework. Organised groups based in diverse cities such as London, New York, Dubai, Kuala
Lumpur and Singapore conducts hundi operation through their partners in Bangladesh or in the
region. Besides this, other unofficial methods are, sending remittance through departing friends
and relatives; personally hand carried by the senders themselves without declaration, and in the
form of visa/ work permit for sell or family use.

Siddiqui and Abrar’s, study (2003), conducted in two thanas of Chittagong and Tangail found
that 46 percent of the total volumes of remittance to these households have been channeled
through official sources. Around 40 percent came through hundi, 4.6 percent moved through
friends and relatives and about 8 percent of the total were hand-carried by the migrant workers
themselves when they were on visit to home (Table 6). The above data do not reflect current
situation as the fieldwork of this study was conducted in 2001.

It is understood that remittance transfer through official channel has increased significantly over
last couple of years. The above study (Siddiqui and Abrar, 2003) also identified some macro and
micro level reasons behind Hundi operations in Bangladesh. The macro level reasons were:

16
• the demand for foreign exchange from racketeers who wish to finance smuggling of various
items including gold;
• the demand from importers’ for foreign exchange from other sources in order to benefit from
the existing tax regime by under-invoicing imports;
• an unholy alliance among officials of financial institutions, business and hundi operators;
• financing recruitment charges of the recruiters;
• difference between official and unofficial exchange rates;
• quality and speed of service, and ability to reach clients both in destination countries and in the
source countries.

From individual’s perspective, the hundi system provided the quickest method for sending
money and little fees for transaction. Hundi operation used the social network of the migrants,
which made door to door service available. Bank transactions required paperwork, and officials
were not always customer friendly. Given the less-educated background of most migrants, many
of them opted for hundi channel. Besides, an important social reason for choosing hundi was the
need to maintain confidentiality. Migrants desired to send money to two or more persons
secretly without creating tension among the receivers i.e., wife and father of the sender. Such
micro level research is not readily available on methods used in sending remittance by the
Bangladeshi immigrants from industrialised countries. However the macro data of Bangladesh
Bank on remittance flows from all over the world highlights an interesting feature. In 2002, an
abnormally high growth of remittance flow in the formal channel was witnessed from the UK
and the US.
Over a period of the last seven years, the growth of remittance remained between 4-6 percent
with regard to the US. In 2001, remittance from the country grew by 47.99 percent. Remittance
flows from the UK were erratic during this period. In some years, it registered growth, and in
others, it declined. Surprisingly, in 2001, from January up to November, remittances grew 136
percent (Table 7). Such unusual growths are attributed to increased surveillance of governments
of concerned countries and improved services of the banking sector since 2001.10 One may
infer that the additional amount (the amount on top of average increase) used to flow through
unofficial channels in the past.

3.4 Transaction Cost and Time

The study, ‘Migrant Workers’ Remittance and Micro- finance in Bangladesh’ (2003) also
calculated the remittance transfer through official and hundi channels at both sending and
receiving ends. At the receiving end, for official channel costs included service charge, speed
money, conveyance and other costs. The average cost per official transaction was Tk. 236.50.
For hundi, at the receiving end, the costs involved phone charges, conveyance, and remittances
lost. For the hundred households under the study, such costs averaged at Tk. 75.53. At the
sending end, costs of remittance transfer in the official channel included service charge, postal
charge and conveyance totalling Tk. 166.64. For hundi, the costs involved fax, phone, postal
charges and money lost.
The average transaction cost for hundi at the sending end was Tk. 52. If one added the average
costs of sending and receiving money through official and hundi methods, those would amount
to Tk. 403.14 and Tk. 127.53 respectively. The common perception that sending money through
hundi does not involve cost, is not valid. Costs may be a minor factor why people use hundi
methods; speedy transaction; less paperwork and confidentiality are more important
considerations. Time particularly was an important factor in determining the method for
sending remittance. The study calculated that on an average remitting through official channels
took 12 days and through hundi it took 3 days.
Since this study was published, various measures were undertaken by the government. This has
reduced the lead time in remittance transfer substantially. Therefore, the required days for

17
transfer through official channel should be much less at the moment. Annually each households
on an average received remittances around four times.

3.5 Public and Private actors in remittance transfer

There are several actors involved in the area of remittance transfer. Among them, Ministry of
Finance (MoF) and Bangladesh Bank (BB) are the two most important institutions. Besides,
Ministry of EWOE (MoEWOE); Ministry of Foreign Affairs (MoFA); Ministry of Commerce
(MoC); Bureau of Manpower, Employment and Training (BMET); National Savings Bureau
(NSB); Privatisation Commission (PC) and Board of Investment (BoI) are other relevant
ministries and agencies in the public sector. Nationalised Commercial Banks (NCBs), Private
Commercial Banks (PCBs), and exchange houses holding drawing arrangements with public and
private banks operating in Bangladesh are the other public and private actors. A new bank,
established by a Micro-finance Institution (MFI) and Refugee and Migratory Movements
Research Unit (RMMRU) of the University of Dhaka are two of the recent non-traditional
players in the area of remittance.
Direct Actors
Ministry of Finance
Ministry of Finance (MoF) is the prime policy making body regarding banking and remittance.
Macro-economic policies that affect exchange rate, monetary and fiscal mechanisms, foreign
exchange reserve etc. are regulated by this ministry. The Internal Resources Division (IRD) of
the MoF floats savings instruments in market, frame rules and identify purchase procedures.

Bangladesh Bank
Bangladesh Bank (BB) is the central bank of Bangladesh. Among other powers and functions,
BB regulates scheduled bank activities, acts as a clearing-house, maintains foreign exchange
reserves and monitors floating exchange rate mechanism in the current accounts. Bangladesh
Bank encourages the nationalised and private banks to link up with foreign banks and exchange
houses in the destination countries. It has a separate department for regulating and monitoring
remittance entitled Foreign Exchange Policy Department (FEPD). It also generates, analyses,
interprets and distributes data on inflow of remittance.

Nationalised Commercial Banks

Nationalised 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. Five NCBs are deeply involved in remittance transfer. These are
Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank Ltd. and Bangladesh Krishi Bank (BKB).
Among the NCBs, BKB is solely targeted towards agricultural development in rural areas.
Within Bangladesh these five NCBs have 2945 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. has been found to be most proactive in the area of migrants’ remittace.
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. National Bank is operating in Oman, Kuwait, UAE, Qatar, Bahrain and Saudi Arabia.
IFIC has curved out a major niche in Bangladeshi community in Oman and has its largest share
with 41% of the market. It also has brances and exchange offices in Nepal and some 13 other

18
Middle Eastern countries. Uttara Bank runs exchange house in Qatar in collaboration with a
local financial institution.

Corresponding Relationships
In almost all countries of the world, both NCBs and PCBs have corresponding relationships with
banks through which Bangladeshi migrants may easily send their money to their beneficiaries’
accounts with any branch of any bank in Bangladesh.

Indirect Actors
MoEWOE
The government, in responding to the demand of the expatriate Bangladeshis and the migrant
workers, created a new ministry entitled the Ministry of Expatriates’ Welfare and Overseas
Employment (MoEWOE) in December 2001. Prime function of the ministry is to create,
promote and regulate employment in overseas. An important consideration for promoting
employment is to ensure steady flow of remittance (GoB, 2003). This ministry has appointed
labour attaches in 13 foreign missions to protect the rights of migrants and disseminate
information on dos and don’ts in the receiving countries including information on official
remittance transfer mechanism.

MoFA
The Bangladesh missions in various migrant receiving countries also have a role in the
remittance transfer process. Among other things, the labour wing in foreign missions assess the
feasibility of opening new branches of Bangladeshi banks in the country concerned and the
efficacy of foreign banks and exchange houses whose names are proposed by Bangladeshi
financial institutions for developing correspondent relationship.

BMET
BMET is the executing agency of the MoEWOE in regulating migration. Some of the major
functions of BMET were to develop and implement training programmes, collect and analyse
market information on labour, and control and regulate the recruiting agencies. The government
believed through the above activities BMET would be able to ensure maximum outflow of
labour and inflow of remittance. An important objective of BMET is to take mesures for
increasing the flow of skilled labour so that the remittance flow isenhanced. Besides, the above
two ministries, MoC, PC and BoI are some more indirect players in remittance transfer.

19
 Chapter 4

Recommendation for Remittance

Collection

20
4.1 REFORMS AND ACTIONS IN HARNESSISING REMITTANCE
Since the return of civilian regime in 1991, successive governments have undertaken various
proactive measures for encouraging the flow of remittance through official channel. Particularly,
when the 7th parliamentary government began its tenure, the foreign exchange reserve of the
country was as low as US $100 Million. The government first attempted to increase the reserve
through accessing foreign credit. However, due to unacceptable conditions set by the
international creditors, the government instead identified remittance as the potential source for
increasing the foreign exchange reserve. Ever since, government has been undertaking concrete
reform measures for increasing inflow of remittance through official channels. The reform
measures can be divided under four broad heads. These are macroeconomic reforms,
streamlining the transfer process, development of lucrative investment instruments, framing
legislation for curbing money laundering and encouraging entry of non-traditional players into
remittance transfer market.

Floating Exchange Rate in Current Account

In the year 2000, BB relaxed foreign currency dealing, allowing authorized dealers to transact
dollars with Bangladeshi Bank. Earlier the banks were obliged to transact at certain fixed rates.
In 2002, MoF has reformed exchange rate policy further. Foreign exchange in current account
has been made free floating. The Bank officials believe that a decision of allowing market to
decide exchange rate in current account has help curb hundi business in a significant scale.
Interestingly, there are days when the curb market rate of US Dollar was lower than the bank
rate.

Streamlining the Transfer Process

Fixed Time Limit for Transfer : Relatively longer transaction time in delivering remittance
was identified as one of the major reason for choosing unofficial channel. In 2001, MoF issued a
circular to all NCBs instructing that remittance must reach the clients within 3 days of receipt of
the draft/TT. It was communicated that stern actions will be taken against bank functionaries if
remittances remain unprocessed for more than the stipulated days. Accordingly, such circular
was followed by concrete actions. Few functionaries of NCBs were penalized ranging from
show-cause, transfer to temporary suspension for their lapses. Electronic Transfer Both NCBs
and PCBs are encouraged by BB to switch over to Electronic Fund Transfer (ETF) system. This
has reduced time as well as bureaucratic procedures of remittance transfer. One of the major
problems of less
educated migrants was to feel up the draft with total accuracy. Postage of draft also created
problem.
Introduction of EFT at a greater scale has addressed these problems adequately. Accountability
of Nostro Account In the past, delays in remittance delivery were also due to withholding of
remittance in the international ‘nostro account’ of the NCBs for certain periods ranging between
a week to a fortnight. This was to yield undue interest on the remittance. The BB instructed all
NCBs for daily reconciliation on the remittance received. It is now mandatory to recover
remittance on daily basis.
After such instruction and concomitant monitoring, it was found that US $ 25 million was
received by one branch of a NCB from Saudi Arabia in one month. Once this delay in nostro
account was settled, it reduced lead time in remittance transfer substantially.

Expansion of Exchange Houses and Correspondent Banks BB has recently permitted opening of
new exchange houses where there is large concentration of Bangladeshi migrants. BB has
minimized the timeframe for scrutinizing applications for developing correspondent
relationships of foreign banks and exchange houses with NCBs and PCBs. Currently, 267

21
drawing arrangements are in operation with 96 exchange houses in different parts of the world.
Besides these, PCBs are also receiving permission to open branches in new areas (Sonali Bank
et al, 2002).
Remittance Data and Monitoring BB maintains data on remittance transfer since 1972. Recently,
it has introduced a method of weekly (provisional) data collection for understanding the trend of
remittance. Currently, datasheets are prepared on bank and country wise. BB analyses and
interprets the reports to identify remittance trends like increase or decrease. Comparative
statement on performance of various NCBs is then distributed among banks, MoF, MoEWOE
and other important agencies. Weekly and monthly monitoring system of remittance trend is
seen by bank officials as an important avenue of problem identification and concomitant action
in keeping the remittance flow steady.

BB is now actively considering exchange house wise analysis and interpretation of remittance
data. According to bank officials, this would lead to competitiveness among the NCBs and their
exchange houses. BB has also determined annual minimum target for the exchange houses. The
NCBs have to ensure that their exchange houses meet those targets. Each exchange houses
situated in USA should transact at least US $3 million. For UK exchange house, the target is 2
million GBP14 and for Canada, the target is US $2.5 million (BB, 2004).
In order to provide information to potential remitters on available transfer institutions in their
localities, necessary information of all the exchange houses and drawing arrangements of NCBs
are provided in the website. These include their names, contact phone and fax numbers, and
postal and email addresses.

If a client face problem in transferring remittance or feel harassed, a system of lodging

complaint to higher authorities has been established. Remitters may contact directly to the
Secretary, Finance Division, MoF or the Managing Director or Executives of concerned NCB to
express their opinions or lodge complaints. Telephone and fax numbers and email addresses of
relevant persons are provided in the website of BB, and also in the directory published by the
five NCBs (Sonali, Janata, Agrani, Rupali and BKB)15 engaged in remittance transfer.

4.2 Remittance Payments, Development and Economics in Bangladesh

Anyone who’s been following the politics and political economy of Bangladesh knows that
remittances are a strong and important driver of the domestic economy.   Over the last 30 years,
the rate of annual growth of remittances has averaged about 19%.  This is an impressive rate of
growth and as such, it is  engine of both economic growth and poverty reduction. In 2009, the
World Bank’s blog on development in South Asia laid out the import of remittances, lest there
were anyone sitting on the fence, in a move to try to reject the impact of remittances:

“Revenues from remittances now exceed various types of foreign exchange inflows, particularly
official development assistance and net earnings from exports. The bulk of the remittances are
sent by Bangladeshi migrant workers rather than members of the Bangladeshi Diaspora.
Currently, 64 percent of annual remittance inflows originate from Middle Eastern nations.”
“Robust remittance inflows in recent years (annual average growth of 27 percent in FY06-FY08)
have been instrumental in maintaining the current account surplus despite widening a trade
deficit. This in turn has enabled Bangladesh to maintain a growing level of foreign exchange
reserves.”

22
That is to say, interest rates are low because of high rates of remittance inflows: the
macroeconomy has been propped by up the fact that people in the Middle East had been sending
back home large chunks of their monthly paycheck.
So that is the consequence of what happens when people send back home money to their
families.  One might add, that remittance payments lessen the burden of social welfare payments
and international aid donations.  This is, as it were, a win-win dynamic.  But what determines
the flow and level of these payments?  It helps to again turn to World Bank research on
remittance payments.

“What are the key macroeconomic determinants of remittances in Bangladesh? Based on a

simple regression exercise we find that number of workers finding employment abroad every
year, oil price, exchange rate and GDP growth are the key determinants of changes in the level
of remittance inflow. Our results show that:
• Each additional migrant worker brings in $816 in remittances annually;
• Every dollar increase in oil price increases annual remittance by nearly $15 million;
• Depreciation of exchange rate by one taka increases annual remittance by $18 million and;
• Remittances are higher during periods of low economic growth.”
No wonder then that as the global economic downturn has dragged on and the price of oil has
dropped from its historical high, thereby costing Bangladeshi workers their relatively lucrative
jobs, the government of Bangladesh is moving to regulate and streamline remittance payments.

4.3 REMITTANCE AND DEVELOPMENT

The impact of remittance on the economy of labour sending countries depends to a large extent
the way they are used (Martin, 1983). Over the years, concerns have been expressed about the
limited extent of the productive use of remittance. Different authors have different perceptions
about what constitute productive use. However, there is a general agreement that bulk of the
remittance money is used in daily expenditure for food and 27 clothing. Another big segment
goes into house improvement. Demary (1986) estimated that 50-60% of remittance in Asia are
typically spent in current consumption and only about 10% goes into investment.

Utilisation
Over the last few years in Bangladesh, major policies and actions have been undertaken to
ensure greater flow of remittance through official channel, yet steps towards effective utilization
of remittance are still inadequate. Here as well, common perception of government functionaries
and NGO activists is that migrants spend a large portion of their remittance in conspicuous
consumption. However, a number of studies (Siddiqui, 2001; Murshed, 2000; Siddiqui and
Abrar, 2001 and, Siddiqui and Abrar, 2003) conducted over the last 5 years demonstrate that in
the 1980s a section of migrants may have spent the remittance unproductively. But the picture
since 1990s is greatly different. Siddiqui & Abrar (2003) shows sector wise use of remittance
invalue terms by 100 interviewee families (Table 8). A summary of the findings is given below.

Food, Clothing, Health The one-hundred interviewee families spent 20.45% of remittance in
food and clothing. Their spending in food was not found to be conspicuous rather they ensured
better diet to help meet their calorie needs, particularly for the younger ones. This can be seen as
investment in future human resource development. Medical treatment and children’s education
consumed another 5.97%.
Investment in Land Agricultural land purchase, homestead land purchase, release of mortgaged
land, taking mortgage of land altogether accounted for 16.43% of the remittance. The table 10
informs that some changes have occurred in landholding pattern of the migrant remittance

23
receiving households. In one of the two areas, there has been a reduction in ownership over
arable land, while with regard to homestead land there has been an increase.

In the other, the ownership of arable land has increased, while that of homestead land has
decreased. Home Construction and Repair Home construction and repair also consumed a large
portion of remittance (15.02%). Investment in home construction and repair is reflected on the
type of homestead of these families (Table 9). These families owned five types of houses: Pucca
(brick house with concrete floor and roof), semi-pucca (brick house with tin roof and concrete
floor), tin (tin structure with concrete floor), semi-kutcha (earth floor, sides with tin and roof
with tins or thatched) and kutcha.(mud floor, sides with mud or bamboo, roof either tin or
thatched). The table shows upward mobility of the households regarding type of homestead
structure.
Repayment of Loan International migration involves huge cost and it was seen earlier that a
significant portion of these costs was borne through borrowing. 10.55% of last 28 three years’
remittance of these families went into repayment of loan. Another 3.47% went into settling debts
incurred by the families due to reasons other than migration. Table 11 shows that 30% of the
respondents have paid back the total loan taken for the purpose of migration, 36% partially
repaid and only 14% could not repay their loans at all. Other 20% did not take any loan in the
first place.

4.4 Remittances in Bangladesh: Determinants and 2010 Outlook

Remittances have emerged as a key driver of

economic growth and poverty reduction in
Bangladesh, increasing at an average annual rate
of 19 percent in the last 30 years (1979-2008).
Revenues from remittances now exceed various
types of foreign exchange inflows, particularly
official development assistance and net earnings
from exports. The bulk of the remittances are sent
by Bangladeshi migrant workers rather than
members of the Bangladeshi Diaspora. Currently, 64 percent of annual remittance inflows
originate from Middle Eastern nations.
Robust remittance inflows in recent years (annual average growth of 27 percent in FY06-FY08)
have been instrumental in maintaining the current account surplus despite widening a trade
deficit. This in turn has enabled Bangladesh to maintain a growing level of foreign exchange
reserves.
What are the key macroeconomic
determinants of remittances in
Bangladesh? Based on a simple
regression exercise we find that number
of workers finding employment abroad
every year, oil price, exchange rate and
GDP growth are the key determinants of
changes in the level of remittance inflow.
Our results show

24
that:
• Each additional migrant worker brings in $816 in remittances annually;
• Every dollar increase in oil price increases annual remittance by nearly $15 million;
• Depreciation of exchange rate by one taka increases annual remittance by $18 million and;
• Remittances are higher during periods of low economic growth.
The findings are plausible and consistent with international evidence. In India - another
significant remittance recipient county in the South Asia region – migration, oil price, exchange
rate and GDP growth has been found to be the salient macroeconomic determinants of
remittance inflows as well.
An interesting implication is that the impact of oil price increase on Bangladesh’s balance of
payment is unfavorable. A dollar increase in oil price increases oil import payments by about
$26 million whereas it increases remittances by $15 million. Thus the impact of a dollar increase
in oil price on the balance of payments is a deficit of $11 million.
There is a widespread concern that recent decline in international oil prices and slow down in
the global economy, particularly US, Europe and Middle-East are likely to have adverse effects
on Bangladesh’s remittance inflows. How bad can it get let’s say next year (FY10)?
Assuming oil prices at around $70 per barrel and GDP growth of 5.5 percent we predict:
• Remittance will grow by 12.4 percent, reaching $10.76 billion, if we are able to export another
610,000 workers (annual average of 2006-2008) in FY10. This is the optimistic case.
• Remittances will grow by 10.2 percent, reaching $10.55 billion, if the outflow of migrant
workers in FY10 reverts to levels observed before the recent oil price boom—350,000. This is
the base case.
• Remittances will grow by 8.5 percent, reaching $10.38 billion, if the outflow of migrant
workers in FY10 is only 50 percent of the base case—150,000.

4.5 Bangladesh receives record nearly $11 bln remittance in 2009-10 fiscal
Bangladesh received highest remittance in the 2009-10 fiscal year (from July 2009 to June 2010)
from millions of migrating workers.

Remittance from more than 6 million expatriate Bangladeshis in 2009-10 fiscal year totaled
10.97 billion U.S. dollars, around 13. 20 percent higher than the same period a year ago, the
central bank data showed on Tuesday.

According to provisional statistics of the Bangladesh Bank (BB), the amount of remittance, a
key source of foreign exchange for the impoverished country after garments exports, in the last
month stood at 877.95 million U.S. dollars, down 2.78 percent over that in May.
Bangladesh's inflow of remittance during the first 11 months of 2009-10 fiscal year surged 14.94
percent to 10.08 billion U.S. dollars, more than the total amount of 2008-09 fiscal year.

25
During 2008-2009 fiscal year (from July 2008 to June 2009), the expatriate incomes hit a record
9.69 billion U.S. dollars.

"The growth in inflow of remittance in the last fiscal year is the result of the BB's continuous
efforts to encourage expatriate Bangladeshis to remit home money through formal channels," a
senior central bank official, who preferred to be unnamed, said.

Despite the global economic downturn, he said, fresh overseas employment opportunities to
hundreds of thousands of Bangladeshis so far this year and last year also contributed to the
steady growth in inflow of remittance.

As the global economic downturn squeezed opportunities of fresh employment in developed

countries, overseas jobs for Bangladeshis in the first half of this year were reduced by around
18.82 percent over that a year ago.

According to statistics of the Bangladesh Bureau of Manpower Employment and Training

(BMET), some 203,684 Bangladeshis including 34,798 people in June found foreign jobs from
January to June this year, compared with around 250,900 jobs in the same period a year ago.

In 2009, about 475,278 Bangladeshis found overseas jobs against a record of 875,000 in 2008.

Higher inflow of remittance has pushed Bangladesh's foreign exchange reserves to a record high
level for the first time last month. According to BB, the forex reserve stood at 10.75 billion U. S.
dollars at the end of June.

4.6 Remittance Boost Bangladesh Economy

The amount of money sent home has reached a new record high in Bangladesh. The amount of
money sent home by Bangladeshis living abroad has reached a new record high, according to the
Central Bank of Bangladesh. In August, the total sum of money sent home reached a historic
peak of $937m - up 30% from a year ago.

The boost to the Bangladeshi economy comes despite the global recession hitting overseas jobs.
Remittances are the country’s second-highest revenue earner after exports.There are an
estimated 6.5 million Bangladeshis living and working abroad, mainly in the Middle East, South
East Asia, Europe and the United States.Millions at home are dependent on money sent by their
expatriate relatives - money that has been credited for the decline in poverty in the country.

26
“This is the highest monthly remittance we have received in our history,” said Ziaul Hasan
Siddiqui, deputy governor of the Central Bank.

“The figure also shows that the global recession had little impact on the flow of remittance to
Bangladesh although job opportunities in the major markets have declined in recent months.”
Many other countries have reported a sharp decline in remittances during the economic
downturn.

But analysts say many Bangladeshis are in low-end jobs and so the recession has not hit them as
hard as it has affected blue collar workers.
The increase in remittances could also be partly due to two upcoming religious occasions - the
Muslim festival of Ramadan and the major Hindu religious celebration of Durga Puja.
However, the upward trend may not continue for long, as overseas employment has fallen in
past months due to declining demand. The flow of migrant workers returning home has also
increased.
The government of Bangladesh has identified seven new countries - including Lebanon, Sudan,
Romania and Greece - to send workers to.
The state will seek to open diplomatic missions in those countries, to look for job opportunities.
Bangladesh received $1.823 billion during the July-August period of fiscal 2009-10, registering
an 18.19 percent growth over the corresponding period of the previous fiscal, the Bangladesh
Bank (BB) data showed.
The central bank of Bangladesh earlier took a series of measures to encourage expatriate
Bangladeshis to send their hard earned money through formal banking channel instead of the
illegal “hundi” system and boost the country’s foreign exchange reserves.
As part of the measures, the BB has issued four more licenses to three commercial banks in the
last month for setting up exchange houses in different parts of the world aimed at expediting
remittance inflow.
Four state-run commercial banks and d
ozens of private commercial banks have also stepped up efforts to increase remittance flow from
the Middle East, the United Kingdom, Malaysia, Singapore, Italy and the United States.
“We are establishing new contacts with overseas exchange houses so that our overseas workers
can find it easy to send money back home. We’re also trying to set up our own exchange
houses,” Managing Director and Chief Executive Officer of the Agrani Bank Limited Syed Abu
Naser Bukhtear Ahmed told media in Dhaka.
Bangladesh’s foreign exchange reserves stood at $9.149 billion on Thursday due to the robust
remittance.
The BB officials said the foreign exchange reserve would come down slightly as the central
bank is set to pay around $512 million to the Asian Clearing Union (ACU) in a day or two. The
ACU is an arrangement among the central banks of Bangladesh, Bhutan, India, Iran, Myanmar,
Nepal, Pakistan and Sri Lanka to settle trade related payments on a multilateral basis.

D-8 Organisation has developed various plan to further improve remittance sector of the D-8
Countries. The organization plans to set up a D-8 Working Group of Migrant Workers,
Remittances, and Microfinance to help coordinate policies among the countries. Meanwhile,
during the working visit to several international organisation in Geneva and Rome in 2008, D-8
Secretary General has formally invited a number of potential participants from IFAD, and OFID
to share ideas on how to optimize this growing sector for the benefit of the D-8 countries.

27
 Chapter 5
Regulation related of Foreign Remittance

28
5.1 Foreign Exchange Regulation Act, 1947 (As modified up to 1996)
The Foreign Exchange Regulation Act, 1947 is the primary regulatory instrument of Bangladesh
with respect to all kinds of foreign exchanges including that of foreign currency transfer like
remittance. The act came into being on 11 March 1947. But it has been modified several times
up to 30 June 1996 (BB, 1998).
Authorized foreign exchange dealers: The act provisions authorized dealers in foreign exchange.
It restricts foreign exchange dealings like buying, borrowing, selling, lending, conversion etc. by
any person other than an authorized dealer. The authorized dealers have to comply with general
and/or specific directions and instructions issued by Bangladesh Bank from time to time. The
authorized dealers shall, before undertaking any transaction in foreign exchange on behalf of
any person, require that person to declare that the transaction will not involve any violation of
the act.
Penalty, prosecution and tribunal: The act provides for jail sentence of maximum 2 years and/or
fine equal to the amount decided by court as punishment for violation of the act. Where the
violation is perpetrated by an organization instead of a person, every official thereof who is
knowingly a party to the offence shall also be guilty of the same offence and liable to the same
punishment. Session courts will act as tribunals for trial of violation of the act.
Power to call information: The act entitles government or BB to call for any kind of information
with regard to any matter of foreign exchange by any person.
Power of inspection: The act entitles government or BB to inspect books of accounts and other
documents of any person, firm or business organization over foreign exchange.
Export of foreign currency: The Notification No. FE 1/94-BB dated 12 November 1994 permits
any person, at the time of departure, take out Bangladeshi currency of Tk.500/- value
Import of foreign currency: The Notification No. FE 2/94-BB dated 12 November 1994 permits
any person to bring into Bangladesh from any place outside US $5000 or equivalent in foreign
exchange and/or Tk.500/- in Bangladeshi currency without declaration. If the amount of money
brought is more than the said amount, the concerned person has to make a written declaration to
the Customs Authority at the time of arrival, in the form prescribed by BB.
Implementing agency: Bangladesh Bank is the implementing agency of the act. It has a specific
department entitled ‘Foreign Exchange Policy Department’ for supervising all kinds of foreign
exchange matters including
foreign remittance.
Evaluation: Foreign Exchange Regulation Act, 1947 is an all encompassing legislation that
covers all kinds of foreign exchange transfer. This act was does not have any specific section on
migrant remittance. Under the broad umbrella of the act, the Foreign Exchange Policy epartment
has framed guidelines to manage remittance movement. Currently there are 16 cases under this
act. But none of them are related to migrant remittance.

29
5.2 Money Laundering Prevention Act, 2002
The Money Laundering Prevention Act, 2002 received the consent of President to became a law
on 5 April 2002. The act was amended in 2003 (BB, 2003). The act understands 'money
laundering' as illegally earning or gaining resources directly or indirectly and as perpetrating or
assisting in illegal transfer, conversion or concealing position of legal or illegal resources earned
or gained directly or indirectly.

Responsibilities and powers of BB in prevention: The BB is entrusted with the responsibility of

suppressing and preventing money laundering crimes by implementing the act. Bangladesh
Bank has an Anti-Money Laundering Department who has the following responsibilities:
a) Investigating money laundering crimes;
b) Supervise and observe activities of banks, financial institutions and other
bodies involved in financial activities;
c) Calling up report on money laundering from banks, financial institutions and
other bodies involved in financial activities;
d) Reviewing the aforementioned reports and act accordingly;
e) Train officers and staffs of banks, financial institutions and other bodies
involved in financial activities; and
f) Conducting other activities required for fulfilling the objectives of the act.

Power of investigation: BB or a person empowered by BB can investigate money laundering

crime(s). All money laundering investigations are initiated by BB. If a case concern a bank
official, BB conducts the whole investigation. But if the alleged perpetrators are general people,
BB gives power to police/CID/Bureau of Anti-corruption etc. to investigate the case. It often
happens that police or other law enforcement agency comes across a money 26 laundering
crime. Then they request BB to empower them to investigate and she obliges.

Reasons of launching money laundering investigation: Money laundering investigation can be

launched for a number of reasons: absence of source or destination of money in a bank
transaction; imbalance of a transaction with the known earning of the account holder; suspicious
TT; hundi; money recovered from public place like road, rail station, port or airport; complaint
from bank(s), other financial institution(s) or law enforcement agency /agencies.

Money laundering court: Trial of money laundering cases will take place in a session court. Any
session court will be considered as money laundering court while trial of a money laundering
case is underway in the court and the judge hearing the case will be called money laundering
court judge at that point of time.
Punishment for money laundering: A person can be given a minimum of 6 months to a
maximum of 7 years jail sentence along with fine worth double the amount of money involved
for money laundering.

International agreements: The act provides scope for entering into agreements with foreign
governments to fulfill its objectives. After it came into being, Bangladesh was approached by
Thailand last year for an agreement to prevent inter-state money laundering. But that agreement

30
stipulated for existence of Financial Intelligence Unit (FIU) which Bangladesh is yet to have.
Formation of FIU is currently under active consideration of government.

Evaluation: Bangladesh is the first South Asian nation to have specific law for prevention of
money laundering and money laundering court for trial of such cases. Pakistan and Sri Lanka is
yet to establish such specialized laws and courts to deal with money laundering. India has
framed money laundering law in 2003.

Since introduction of the act, BB received around 300 complaints of money laundering. After
investigation, 17 of them turned out to be criminal offences. All 17 cases are currently under
trial. However, in general, prosecution process in Bangladesh is extremely slow paced. In many
instances, cases remain unresolved for decades. For effective implementation, prosecution
process has to be streamlined, of course, maintaining due course of law.

5.3 Bangladesh Economic Scenario and Foreign remittance

Bangladesh maintained a steady growth in 2009 despite global financial turmoil, but growing
power and energy shortages and poor infrastructure remained as major hurdles to the country’s
industrial activities. Financial markets and institutions remained free of the toxic assets and
contagion afflicting the global financial markets over the last couple of years because of the
limited and regulated external exposure of our economy. Unlike most other economies in the
region and elsewhere, economic in Bangladesh has so far been only mildly impacted by the
ongoing global slowdown, attaining 5.9 percent real GDP growth in Financial year 2009
following 6.2 percent growth of Financial year 2008. Foreign exchange reserve is more than
USD 7.04 billion even after ACU adjustment. Inward remittances are recorded at USD 9.7
billion (end of June 2009) and exports continue to post double digit growth.

In sharp contrast to the gloomy outlook with regard to remittance flows worldwide,
Bangladesh’s performance in this area in Financial year 2009 remained upbeat. Remittances of
Bangladeshi nationals working abroad increased by more than 22.42 percent in Financial year
2009 over Financial year 2008. Monthly remitted amount of USD 919.10 million, the highest
single month’s performance ever, was recorded for June 2009. Remittances from Soudi Arabia
constited the share of the total inward remittance (29.51), followed by the United Arab Emirates
(about 18.11%) and the USA (about 16.26%).

5.4 Movement of World Remittance :

For the highest fifteen remittance inflow countries by position from 1995 to 2002, Bangladesh
maintained in the position of 13th From 1995 to 1997, and after that from 1998 to 2002
Bangladesh maintain 8th position successively.

That means remittance inflow in Bangladesh is relatively stable with world remittance
recipients’ countries which is a positive sign for sustainable remittance inflow position.

5.5 Remittances of Bangladesh:

Generally Bangladesh was considered as a trade deficit country but last few years in 2002, 2003,
2005 and 2006 its current account balance was positive for high remittance inflow.

31
 40000
Remittance Impact on Current Account Balance of Bangladesh
30000

20000
Tk in Crores

10000

0
1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006
-10000 (Jul-
Dec)
-20000
Year
-30000

-40000
Remittances (in Crores) Data Source:
Current Account Balance (in Crores) Foreign Exchange Policy Department,
Current Account Balance Without Remittance (in Crores) Bangladesh Bank

5.6 Country wise remittance inflow in Bangladesh:

Bangladesh is highly depended on the Middle East countries for its remittance. This highly
country specific remittance concentration shows a very risky scenario for the remittance
sustainability of Bangladesh. Any kinds of economic crisis in these countries specifically in
Middle East region or only in Saudi Arabia will cause very poor remittance balance for
Bangladesh.

% of Total
Country Remittance inflow of
Bangladesh
Saudi Arabia 41.24%
U.A.E 9.15%
Qatar 3.97%
Oman 4.59%
Bahrain 1.99%
Kuwait 11.92%
Libya 0.67%
Iran 0.13%
Malaysia 1.87%
Singapore 1.05%
Total Middle East Regions 76.59%

32
 % of Total Remittance inflow of
Country
Bangladesh
Saudi Arabia 41.24%
U.A.E 9.15%
Qatar 3.97%
Oman 4.59%
Kuwait 11.92%
U.S.A 12.82%
U.K 6.02%
Remittance Inflow
from 7 Countries 89.70%

% of Total Remittance inflow of

Country
Bangladesh
Saudi Arabia 41.24%
U.A.E 9.15%
Qatar 3.97%
Oman 4.59%
Kuwait 11.92%
Highest 5 Middle East
Countries 70.87%

5.7 Country wise labor migration from Bangladesh:

Total labor migration from Bangladesh is increasing but it is also highly dependent on the
Middle East countries. Only ten highest labor migrated countries- Saudi Arabia, UAE, Qatar,
Oman, Bahrain, Kuwait, Libya, Iraq, Singapore and Malaysia hold 96.83% of total labor
supplied from Bangladesh for last 31years. This highly country specific labor migration shows a
very risky scenario for the labor migration and remittance.
Any kinds of economic and political crisis on these countries specially in Middle East region
(87.4%) or only in Saudi Arabia (48.78%) will cause very poor migration and remittance
balance for Bangladesh.

• In 1991, for intra country cooperation Saudi Arabia, Malaysia stopped migration
from Bangladesh
• In 1994 for the war reason Saudi Arabia, Kuwait, Qatar, Oman, Bahrain,
Malaysia reduced labor migration
• In 2001 Saudi Arabia, UAE, Qatar, Oman, Bahrain, Libya, Singapore, and
Malaysia had reduced labor migration from Bangladesh because of bad
economical situation

33
 The Trend of Total Labor Migration from Bangladesh (1976- 2006)
400,000
350,000

300,000
Number of migrated labor

250,000
200,000
150,000

100,000
50,000
0
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Year

Country wise Total Labor Migration from Bangladesh (1976- 2006)

2,500,000

2,000,000
Number of total migrated
labor (1976-2005)

1,500,000

1,000,000

500,000

0
UK
Iraq

Oman

Italy
U.A.E

Japan
Libya

S.Pore

Ireland

Spain

Namibia
Qatar

Jordan

Laos
K.S.A

Others
Brunei
Bahrain

Malaysia

Maldives
Lebanon
Mauritious
Kuwait

Korea(S)

Miscellaneous

Labor migrated countries

After a certain period, probably, if these countries will not require any more labor, Bangladeshi
labor migration will further decline.

5.8 Workers category wise labor migration from Bangladesh:

BMET has classified temporary migrant workers in four categories. Professionals refer to
doctors, engineers, nurses and teachers; skilled workers include manufacturing and garment
workers; semi-skilled workers include tailors and masons; and housemaids, cleaners and
laborers are considered as unskilled workers.

Profession wise Overseas Employment Trend from Bangladesh (1976- 2004)

160,000
Number of migrated labor

140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
1978
1979

1982
1983

1986
1987

1990
1991

1993
1994
1995

1998

2001
2002
2003
1976
1977

1980
1981

1984
1985

1988
1989

1992

1996
1997

1999
2000

2004

Worker's Catagory Professional Worker's Catagory Skilled

Worker's Catagory Semi-skilled Worker's Catagory Un-skilled Year

34
Skilled and Professional people are always highly demanded so that at the time of 1994, 2000,
2001, when total labor migration is decreased, mainly unskilled labor migration decreased.

The professionals are highly salaried people who can generate huge remittance but the least
migrated group (4.45%) from Bangladesh where, from 1976 to 2004, skilled labor migration
rate was 32.34%, semiskilled was 16.11%, and unskilled was 47.1%.

5.9 Recruiting media wise labor migration from Bangladesh:

Only a very few portions of labor are migrated through the government (1.07%) and most of the
labors are migrated through individual (58.46%) or by the recruiting agents (40.19%).

Recruiting Media wise Labor Migration Trend from Bangladesh (1976- 2004)
200,000
180,000
Number of migrated labor

160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
BMET BOESL Recruiting Agent Individual Year

5.10 Illegal channel of remittance inflow in Bangladesh:

Every year huge amount of remittance comes in Bangladesh through illegal way where:

• 40% of total remittances are caused the illegal hundi business

• 46% through official source
• 4.61% is coursed through friends and relatives
• 8% by migrant workers when they come home

In 2004, the central bank with government has adopted strict measures to prevent unofficial
channels of foreign exchange transfer. So, the hidden reason for increasing remittance in 2004-
2005 is not more people sending more remittance but more people sending money through
official channels.

35
 Chapter 6
Remittance economy: A study

36
6.1 INTRODUCTION
The importance of foreign remittances in the economy of Bangladesh is widely recognized and
requires little reiteration. Along with the readymade garment (RMG) sector and non-farm
activities in the agricultural sector, remittances have been identified as one of the three key
factors that have been responsible for reducing the overall incidence of poverty in Bangladesh
(Osmani 2004). The volume of remittances from Bangladeshi migrant workers exceeded USD 4
billion in early 2007 (the Daily Star, 27 February 2007), a figure which dwarfs the amount of
yearly foreign direct assistance received by the country.

It is therefore striking that very limited empirical work has been done in relation to the actual
impact of remittances on incomes. Azad (2004) and Siddiqui (1999) explored, in a mainly
qualitative fashion, the potential of remittances as a source for micro-finance initiatives. Their
line of reasoning suggests, without implying causality, that remittances can feasibly be
considered as falling within the purview of pro-poor initiatives. de Bruyn and Kuddus (2005)
examined the dynamics of remittance utilisation without drawing firm conclusions on its
effectiveness as a poverty alleviating tool.
Indeed, any comment on the abovementioned aspect of remittances will at best be speculative
unless supported by firm empirical evidence. We therefore propose to carry out a statistical
study on the effect of remittances on percapita incomes, which have a direct implication on the
welfare of households, in order to remove such speculation and channel the discourse away from
the qualitative realm onto a more secure, quantitative footing. Such an effort is necessary in
order to derive more accurate conclusions which will greatly assist in the formulation of
guidelines for future policy.
This paper is set out as follows: section 2 is a general discussion of remittances vis-à-vis
Bangladesh, section 3 lays down the analytical framework of the study, section 4 the objectives,
methodology and scope. Section 5 provides the empirical evidence while section 6 concludes
with a general discussion and provides a few policy recommendations.

6.2 REMITTANCES AND BANGLADESH

The outward migration of labour and the remittances that are generated as a result have been a
feature of Bangladesh’s post liberation history. The earliest official records on remittances
indicate that the country received about US$24 million in overseas remittances in 1976. Since
then foreign remittance receipts have grown at an exponential rate.

FIGURE 1: REMITTANCE INFLOW

7000

6000

5000
Million US$

4000

3000

2000

1000

Year

Source: Sayed (2007), author’s calculation.

37
For any worker sending country, migration results in a mixture of benefits and costs.The costs
may include the loss of the labour supply in which substantial amounts of human capital
are invested, possible distortions in the age structure of the population, rural
depopulation and a “brain drain” to developed countries. On the benefits side, we may see a
reduction in social tensions caused by unemployment and/or underemployment, skill
acquisition of returning migrants and, most significantly, money transfers from migrants to
their families back home. Figure 2 charts the annual outflow of migrants from
Bangladesh.

FIGURE 2: OUTFLOW OF MIGRANTS FROM BANGLADESH

450
Number of Migrants (Thousands)

400
350
300
250
200
150
100
50
0

Year

Source: DFID, author’s calculation.

The role of remittances in the economies of labour sending countries such as Bangladesh is
assuming increasing importance. It is viewed as a very stable source of foreign
exchange (Ratha 2005) and even as being counter-cyclical (Esquivel and Huerta–Pineda.
2006). The effect of remittances on the macro-economy of a country has been well
documented in the literature. The incoming foreign exchange helps receiving countries to pay
import liabilities, improve their balance of payments position, strengthen foreign
exchange reserves and finance external debt.

At the micro level, which is the focus of this paper, remittances contribute towards
increasing the income of receiving households with concomitant effects on the standard of
living, while depending upon consumption patterns they have been known to increase the
level of savings (Ratha 2005) which is a source of capital. Thus, in resource scarce
countries like Bangladesh remittances have a great potential to generate positive
economic and social impacts. This fact has been recognised by policymakers and has
received attention from researchers. However, as has been mentioned, there are hardly any
studies on the microeconomic impact of remittances on household or percapita
incomes. Most research has tended to be on the potential use of remittances as a policy tool
and, having acknowledged its importance, on possible avenues of further increasing the
volume of official remittance receipts by channelising them through legal avenues and by
promoting even greater export of labour. Figure 3, which charts remittances as
percentage of GDP, highlights its growing importance in the economy of Bangladesh.

6.3 ANALYTICAL APPROACH

38
The key research question we pose is whether or not there is an effect of overseas
remittances on poverty in Bangladeshi households. In order to address the issue we aim to
utilise an econometric technique commonly employed in the impact evaluation literature
(see, for example, Esquivel and Huerta–Pineda. 2006). In particular, we intend to make use
of a propensity score based matching approach (propensity score matching or PSM,
Rosenbaum and Rubin. 1983, 1985). Under this approach we will match remittance-
receiving households with other households that share similar characteristics but do not
receive remittances. Once the matching is made we will be able to compute the effect of
remittances on the probability of being in poverty. Our justification for adopting the PSM
approach is based on a paucity of data, which prevents us from examining household
situations before and after remittances have been received. In fact, any application of such a
difference-in-differences approach requires longitudinal or panel data on remittance
receiving households which do not exist to the best of our knowledge. A regression based
approach to the issue is fraught with the problem of selection bias. Since international
migration tends to be costly, it is possible that only the relatively well-off households are
able to send workers abroad. If that is indeed the case, a simple ordinary least squares
regression might overestimate the impact of remittances on the poor. An instrumental
variables (IV) regression may be carried out as a remedy, but it is difficult to obtain
appropriate instruments in natural settings.

To assess the effect of remittances on the well-being of a household, we must therefore

compare the observed outcome (poverty situation) with the outcome that would have
resulted had that household not received remittances. But in reality we observe only one
outcome, which is known as the factual outcome. The counterfactual outcome, which we do
not observe, on the other hand, is that which would have resulted had the remittance
receiving household not received it. The major challenge of impact studies is to estimate this
counterfactual in a reliable way. If we can make sure that receiving remittances is truly
random, we can estimate its effect by comparing the outcome of recipients with that of the
non-recipients. Such natural experiments are theoretically very attractive. But, in practice,
we cannot (and should not wish to) restrict some households from sending family
members abroad when they might benefit from it. Thus, natural experimentation, though
theoretically the most reliable (Bryson, Dorsett and Purdon 2002), is not a feasible approach.
In situations where random assignment of treatments is not possible, non- experimental
methods are applied to evaluate the impact of programme participation (the programme being
defined as receiving remittances). The most common non-experimental methods in the
literature are the difference-in-differences estimation, the IV technique and matching.

Considering the mentioned difficulties associated with random sampling, DiD and IV
methods, a matching method has been applied in this study. This method assumes that
selection can be explained in terms of observable characteristics. For every household in the
treatment group, a matching household from the non-treatment group with similar
characteristics is chosen. The mean effect of the paired individuals can then be treated as the
average treatment effect on the treated (ATET) (Bryson, Dorsett and Purdon 2002).
Following the notation of the evaluation literature, let us denote D = 1 if a household
receives remittances and D = 0, otherwise. Then we can define the outcome for the
recipients as Y (1) and the outcome for non-recipients as Y (0). In this study, the outcome
variables will be per capita income, the squared income difference from a threshold
poverty level and a poverty status code. In order to derive the threshold poverty level, we
will use the definition of the Poverty Monitoring Survey (BBS 2004) which defines the
poverty line as the monthly per capita expenditure on both food and non-food items

39
combined at the poverty line calorie intake. These data allow us to measure poverty status
against established thresholds.

The treatment variable of the study will be a binary variable, coded as 1 if the household
receives remittances and zero otherwise. Since receiving remittances is similar to
receiving treatment, we may estimate the average treatment effect of receiving
remittances on the level of per capita income and other outcome variables. The parameter of
interest is the ATET, which is calculated as:
ATET = E[Y (1) – Y (0) | D = 1] = E[Y (1) | D = 1] – E[Y (0) | D = 1]

The second term of the right hand side of the equation is known as the counterfactual
mean for those being treated. It tells us about how a treated individual would have
performed had he not received the treatment. In practice, this counterfactual effect is not
observed and using the mean outcome for the untreated individuals, E[Y(0) | D = 0], as an
approximation would result in selection bias. To solve this problem, the propensity score
matching technique is used to estimate the counterfactual. The propensity score is an
index function defined as the probability of receiving treatment conditional on observed
covariates X: P(X) = Pr (D = 1 | X). In matching based on propensity scores, outcomes
of treated and control groups are compared based on a single index P(X) instead of all
variables in X. This takes care of the so-called problem of dimensionality. This technique,
however, solves the selection bias only if two crucial assumptions are satisfied. The
fundamental assumption is that of conditional independence (CIA), which requires that
conditional on a set of observables X, the outcome must be independent of the true
treatment status of the individuals. Since selection bias arises for some elements of X
affecting the probability of getting treatment may also affect the outcome, if we can make
sure that none of the variables in vector X is influenced by treatment, differences in
outcomes based on P(X) would be independent of the treatment status of the household,
D. In that case, the following condition would be satisfied:
Y (0), Y (1) ⊥ D X

Keeping this in mind, we will include observable characteristics in the model, which are not
affected by treatment status of the households.

The second assumption is known as the common support or overlap condition, which
requires that none of the households are either treated or not treated with certainty. Thus the
overlap condition requires:
0 < P (D = 1) < 1
In this study the probability of being treated will be estimated by computing for each
household the log-odds ratio derived from a logit regression and households not satisfying the
overlap condition will be excluded.

It should also be mentioned here that, PSM estimators of ATET may vary for different
neighborhoods chosen for each treated individual and for different weights assigned to these
neighbors. Hence, to check the robustness of the results, both un-weighted and weighted
matching algorithms (radius and kernel) would be applied. The technical details pertaining to
these algorithms, which have been implemented using the statistical software package
STATA, have been relegated to Appendix 1.

6.4 OBJECTIVES, METHODOLOGY AND SCOPE OF RESEARCH

40
The objective of the study is to evaluate the impact of remittances on per capita incomes,
examine the related poverty effect and to recommend relevant macroeconomic policies
that are pro-poor in nature. There is a plethora of studies on remittance flows and usage
within the purview of the migration literature. However, the number of studies which
have quantitatively examined the specific effects of remittances on incomes and poverty
is meagre. Esquivel and Huerta-Pineda (2006) use PSM to examine the impact of
remittances on poverty in Mexico; otherwise, we are not aware of any other such studies.
In particular, we are not aware of similar studies carried out for South Asia and certainly
not Bangladesh. The reasons for this lacuna may well be a commonly held a-priori
supposition that a remittance receiving household would improve its poverty status. This
is, however, by no means obvious since the costs of migration may outweigh the benefits.
We intend to confirm or deny the a-priori supposition. Thus, the contribution of this
study, aside from being a first attempt, will be twofold: to assign a numerical value to the
extent of poverty reduction induced by remittances if any, and, based upon the results, to
propose policy measures to either encourage or mitigate the effects. As has already been
mentioned, any policy discussion can only benefit if guided by numbers.

The analytical framework of the study has already been outlined in detail. Ideally, we
would have preferred to have conducted a sample household survey in order to obtain
detailed primary data. However, as this was not possible, we made use of information
contained in the Household Income and Expenditure Survey (HIES) 2005 of the
Bangladesh Bureau of Statistics (BBS). This survey covers almost 10,000 households and
has data on household characteristics, individuals, incomes and expenses. Using this
information we calculate yearly per capita income in 2004 Taka as the monetary income
of the household plus the monetary or transfers in kind received by the household divided
by the total number of household members. Remittances are measured as the yearly
transference in Taka received from overseas.

Our treatment group, i.e. the group receiving foreign remittances, consists of 905 separate
households. This represents approximately 9% of all households covered under the
survey. The figure is slightly higher than the 7% reported by Esquivel and Huerta-Pineda
(2006) in their study on Mexican overseas remittances. Appendix 2 gives a district-wise
breakdown of foreign remittance receiving households. According to the survey, all the
districts of Bangladesh with the exception of Lalmonirhat contain households which
receive overseas remittances. The district with by far the largest number of such
households is Noakhali. Lakshmipur, Chittagong, Sylhet and Feni also have appreciable
numbers of remittance receiving households. Table 1 shows some selected summary
statistics for the treatment group. Our control group is a random sample of 1,000
households which do not receive remittances but otherwise share similar characteristics
with the treatment group. Taken together, the entire dataset consists of 1,886 observations
after some nineteen observations with missing or idiosyncratic data were dropped. We
have called this dataset the “full” dataset. Table 2 shows the same summary statistics for
the control group. It is noticeable that the means of all the variables in the control group
are lower than their counterparts in the treatment group. Particularly striking are the levels
of household and per capita incomes which are nearly 50 per cent lower in control group.
In the matching exercises we will attempt to quantify the contribution of overseas
remittances to this disparity.

In order to examine poverty related impacts more deeply, we constructed a second

41
dataset, which we have called the “sub-dataset”, by choosing only those households
which have incomes below our defined poverty threshold of Tk.12,000 per capita per
year. We arrived at this number by inflating the Tk.631 per month national, calorie-intake
based, poverty measure reported in the Poverty Monitoring Survey 2004 by the
Bangladesh Bureau of Statistics. Using this measure we also coded poverty status. The
sub-dataset has 1,034 observations.
The infeasibility of natural experimentation means that our estimator of the average
treatment effect will obviously be non-experimental. However, such an estimator could
be biased since the assignment of individuals to treatment and non-treatment groups will
not be random. This means that matching between control and treated subjects becomes
problematic if there is an n-dimensional vector of characteristics. A way around this
problem is to use a propensity score matching technique. The score will summarize the
pre-treatment characteristics of each individual into a single variable, the propensity
score, which can then be used for matching. This will greatly minimize the bias associated
with comparing similar treated and control groups. As has already been mentioned, for
the purpose of this study, we will use the log-odds ratio of receiving treatment computed
from a log it regression to estimate the propensity score for each individual.

For each dataset we formed two specifications for the log it regressions. One without
any squared or interactive variables and the other with two squared variables (age squared
and education squared) and one interactive variable (education x age). Using the results of
the log it regressions we are then able to compute the propensity score (the log-odds ratio)
for each household in our datasets. Using these scores we then carry out the matching
using radius, kernel and local-linear regression algorithms for every outcome basis. This
is done as a check for robustness.
TABLE 1: SELECTED SUMMARY STATISTICS OF TREATMENT GROUP (N = 902)
Mea Standard Error
Age of household head (years) n 48.71 0.49
Number of rooms per household 3.09 0.05
House size (sft) 479.56 11.4
Education level 7.40 0.13
Yearly household income (Taka) 136,34 5920
Total family size (persons) 2 7.32 0.12
Per capita income (Taka) 20, 860.56
Source: BBS 2004 and author’s calculation. 600

TABLE 2: SELECTED SUMMARY STATISTICS OF CONTROL GROUP (N = 984)

Mea Standard Error

Age of household head (years) n 45.06 0.43
Number of rooms per household 2.37 0.04
House size (sft) 389.57 9.8
Education level 5.12 0.11
Yearly household income (Taka) 52,789 2980
Total family size (persons) 4.99 0.08
Per capita income (Taka) 11,515 623.40
Source: BBS 2004 and author’s calculation.

Our matching exercise can be represented by the schema which follows. It is to be noted
that since the sub-data sets are constructed exclusively with households below the poverty
threshold level, we do not carry out a PSM with an outcome of poverty status for this
group.

42
 Chapter 7

Agrani Bank and Remittance

43
7.1 Emergence of Agrani Bank Limited
Agrani Bank Limited was incorporated as a public limited company on 17 May 2007 with a
view to take over the business, assets, liabilities, rights and obligations of the former Agrani
Bank, which emerged as a Nationalized commercial Bank in 1972, pursuant to the Bangladesh
Banks (Nationalization) Order, 1972 (President’s Order No. 26 Of 1972), on a going concern
basis through a Vendors Agreement. The Agreement was signed between the Ministry of
Finance, Government of the people’s Republic of Bangladesh on behalf of the former Agrani
Bank and the Board of Directors of the Bank on behalf of the Agrani Bank limited on 15
November 2007 with retrospective effective from 01 July 2007.

All shares of the Bank are held by the Government of the people’s Republic of Bangladesh and
12 other shareholders (with one share each, the qualification share required to become a
director) nominated by the Government. The Bank has 867 branches as of 31 December 2009
with no overseas branch.

The Bank has, however, two wholly owned subsidiary companies named Agrani Exchange
House (Private) ltd. in Singapore and Agrani Remittance House SDN, BHD in Kualalampur,
Malaysia.

7.2 Progress Achieved in 2009

The Bank continued to grow steadily in all major areas. Deposits increased by 13.26 percent in
2009 and reached Tk. 16,628 crore from 14,682 crore in 2008. Total loans and advances in 2009
were Tk. 12,223.60 crore as against Tk. 11,336.22 crore in 2008 ; which is 7.83 percent higher
than that of the previous year. The Bank’s profit continued to grow in 2009. The operating profit
rose by 1.81 percent to Tk. 644 crore in 2009 from Tk. 633 crore in 2008, due to which capital
shortfall of Tk. 67.36 crore in 2008 was reversed and led to a capital surplus of Tk. 73.34 crore
in 2009 even after capital requirement increased by Tk. 113 crore.

7.3 International Trade

The international trade financing constitute a major business activity conducted by the bank. The
Bank’s foreign trade related activities, carried out through 40 AD branches across the country,
have earned confidence of importers, exporters and Bangladesh work force working abroad. For
smooth conduct of international trade. The Bank has as many as 383 foreign correspondents
throughout the world. In addition, the Bank is maintaining 39 NOSTRO Accounts with the
world’s leading banks.

7.4 Export Import Business

The import business of the Bank during the year 2009 was Tk. 7,753 crore. The export business
handled by the bank during the year 2009 stood at Tk. 4,461 crore. The slow growth rate in
export business is attributable to the volatile situation in the world economy.

7.5 Foreign Remittance Business

Since beginning, the bank has been highly active in remittance operations to facilitate
disbursement of remittance received from Bangladeshi wage earners working abroad. Inward
foreign remittance also played a significant role in decreasing the bank’s dependency on inter
bank market for payment of import bills in foreign currency. The remittances of the Bank
resulted in steady increase of revenues for the bank in spite of the downward trend in
international trade. In the year 2009 the total remittance stood at Tk. 5,587 crore as against Tk.
5,269 crore in the year 2008. The Bank continues Taka Draft/ Electronics Fund Transfer
arrangements with a number of overseas exchange companies/banks. The Bank strengthened its
overseas network by operating through a total of 35 exchange companies/ banks, covering

44
middle east, the Gulf states, South-East Asia and Italy. Out of these 40 exchange
companies/banks, the has two subsidiaries of its own through which expatriates are remitting
their foreign earnings. The Bank has started instant payment remittance with the assistance of
the following companies :

1. Money Gram
2. Transfast
3. Remitone
4. IME
5. Infinity
6. Xpressmoney
7. Merchantrade
8. Prabhu
9. Cash Over Counter (COC )

The inflow of the remittance through the bank will increase remarkably in the coming days.
Meanwhile, the bank brought a revolutionary change in the remittance system. At present, all the
branches of 52 zones have been brought under this network. As a result, the remitted money can
be deposited to the beneficiaries accounts within 24 hours. The introduction of on-line
distribution of remittances has generated much enthusiasm among the expatriate Bangladeshi
workers.

45
7.6 Scenario From Agrani Bank Ltd (Singair Branch) : Agrani Bank Ltd channels
remittances through more than 30 exchange houses. The graphical distribution of the
contribution of exchange houses are presented above for the consecutive year 2007 and part of
2008.

The flow of remittance has increased almost 28 % in the year 2008. The perfect scenario would
be found once the year finishes.

Here in the graphical distribution it’s clear that one exchange house, Alrajhi Banking Corp. has
topped in the list by a large amount. This exchange house specially remits the money from KSA
expatriates, the largest in the pie.

Exchange house cont. in 2007

Eastern Exchange, Doha, Qatar

Arab National Bank, Riyadh, KSA
Al-Ansari Ex., U.A.E.
Exchange HOuse

Dollarco Exchange Co., Kuw ait

Al-Ahalia Money Ex. Abu Dhabi, UAE Series1
Kuw ait Bahrain Intl Ex. Co. Kuw ait

Al Falah Exchange, UAE

Zenj Exchange Co., Bahrain
CIMB Bank, Berhad, Malaysia
Agrani Exchange House, Singapore
0.00 200.00 400.00 600.00 800.00 1000.00 1200.00 1400.00 1600.00
Volume in MIllion Tk

Exchange house cont. in 2008

Eastern Exchange, Doha, Qatar

Arab National Bank, Riyadh, KSA
Al-Ansari Ex., U.A.E.
Rem in Million Tk

Dollarco Exchange Co., Kuw ait

Al-Ahalia Money Ex. Abu Dhabi, UAE Series1
Kuw ait Bahrain Intl Ex. Co. Kuw ait
Al Falah Exchange, UAE
Zenj Exchange Co., Bahrain
CIMB Bank, Berhad, Malaysia
Agrani Exchange House, Singapore
0.00 200.00 400.00 600.00 800.00 1000.00 1200.00
Exchange House

46
 Chapter 8
RECOMMENDATIONS AND
CONCLUSIONS

47
Recommendations
Public Policy Reforms : The government needs to commit adequate resources to migration
sector. The MoEWOE should propose allocation of resources equivalent to the value of 5% of
the remittances in order to organise services for the migrant workers. A large segment of hundi
money is channeled to finance smuggling. This necessitates reevaluation of taxation policy, and
tariff and duty structures. Such revision has also become necessary for reducing under-invoicing
of imports that is another contributing factor to hundi. The concerned authorities need to assess
if the revenue earning under the existing tax, tariff and duty regimes is higher than the loss of
foreign exchange due to smuggling and under-invoicing. The Bangladesh Bank’s policy of not
allowing private banks opening branches in foreign cities where nationalised commercial banks
have their branches needs to be reconsidered.

Such protectionism is against the 33 principle of liberalisation and private sector development. If
banks gear themselves adequately for harnessing migrants’ remittance then opening of branches
by private banks would lead to a healthy competition and thus is likely to contribute increased
flow of remittance. Government may give migrant workers the right to import goods that can be
considered as remittance in kind. Such remittance in kind may be exempted from custom duties.
The government’s concern of the high risk involved in allowing MFIs to mobilise non-members’
savings is appreciated. However, considering the need for special savings schemes for the
migrant families and the absence of such services at door to door level, the government may
give special permission to a few tested MFIs to engage themselves in managing nonmembers’
savings. Government may undertake a high profile project like ‘Jamuna Bridge’ dedicated to the
migrants and mobilise fund from the migrants in implementing that project.

The report amply demonstrates that the banks are working hard to match the level of services
provided by hundi operators. Following measures may be undertaken to further improve their
quality of services. A good percentage of those who are remitting money and their families are
less educated. In most cases, they are not familiar in dealing with formal institutions and are not
aware about the need for having a bank account. In that context, those who are going overseas
should be encouraged to open accounts before their departure. This can be ensured through
existing BMET clearance process. Before issuing clearance certificate, BMET can ensure if the
migrant has opened a bank account.

A segment of Bangladeshi migrant population is undocumented. There is a tendency of irregular

migrants to send remittance through informal channels. Therefore, along with efforts towards
encouraging flow of regular migration, procedures must be simplified so that irregular migrants
can send remittance through regular channels. In this regard, following the Filipino example,
Bangladeshi banks overseas may be instructed to facilitate opening of account by accepting
documents, other than passport. Bangladeshi banks overseas should periodically mount drive in
a planned way for opening of accounts of Bangladeshi migrant population overseas.

Branches of each bank should set specific targets for opening new accounts of migrants and a
concrete plan of action for attaining such target should be in place. Bank officials are to be
trained, regularly updated and motivated about the importance of migrant remittance. Training
module developed by RMMRU can be utilised in this regard.

The central bank may consider allowing banks appoint brokers/agents on payment of
commission who help mobilising individual remittances. This appears to be an effective tool to
mobilise remittance of Bangladeshi migrants.

48
Framing of money laundering prevention act and subsequent setting up of anti-money
laundering department in the BB are great steps towards curbing hundi. However, prosecution
under the law should be ensured. Financial Intelligence Unit (FIU) may be established under the
auspecies of BB. Bangladesh Bank website contains information on investment opportunities
and available transfer institutions. Websites of MoEWOE, MoC and PC provide information on
investment incentives to migrants. These addresses should be advertised in local ethnic media
run by the migrants in the receiving countries. Missions may organise regular meetings with
community associations and distribute brochures and leaflets among the community leaders.

Ministries and Agencies : There is much room for improvement in the functioning of
Bangladeshi missions abroad with respect to remittance. When queries are made on opening
new branches and corresponding relationships, the missions need to act on them promptly.
Procedural delays have to be minimised by fixing specific time frames. Data is non-existent on
the long term migrants of Bangladesh. In order to design its targeted interventions, BB requires
information on number of migrants, their professional background and area of concentration in
the receiving countries. Recently, the government of India has generated global data on migrants
of Indian origin through its foreign missions. MoFA can also generate estimated figures through
its missions abroad.

There is a general decline in the supply of skilled and professional categories of migrants from
Bangladesh. This has given rise to a situation where increase in number of people migrating has
not been matched by commensurate increase in remittance inflow. Under such conditions, a
number of measures need to be taken by BMET. Many labour receiving countries have
projection plans of development work and concomitant labour needs. Following the example of
the Phillippines, these projection plans need to be collected and analysed on a routine basis.
Accordingly human resources of Bangladesh have to be trained and marketed. Initiatives must
be taken for proper certification of skills that a good section of migrant workers possess, such as
electrician, mason, bricklayer, plumber, fitter, turner etc. In this respect, special incentives may
be provided to private recruiting agencies who export skilled manpower.

Vocational training should be incorporated in mainstream primary and secondary level curricula.
Chapters on migration should be incorporated in textbooks. To increase the communication
skills, English should be introduced as a second language from the first grade.

Micro Finance Institutions and Civil Society Bodies : Tested microfinance institutions should
come forward to play a role in managing migration. They can take up the migrant workers’ issue
as a matter of social responsibility. BRAC has already emerged as a non-traditional actor in
remittance transfer. Experience of BRAC bank regarding remittance transfer may be studied
thoroughly. This will give idea on the possibility of their replication. For serving the migrants,
Grameen Bank may consider proposing amendment to its ordinance. MFIs can make migrants
their members before departure, develop credit schemes for facilitating their migration, form
partnership in remittance transfer, provide package on repayment of loans and savings for the
migrants, assist the remittance receivers in setting up micro enterprises and help reintegration of
returnee migrants through investment assistance.

Potential migrants should be provided information on official remittance process. The training
programmes designed by RMMRU can be replicated at a large scale by private sector and MFIs.
Returnee migrants’ associations should be used as resource organizations in delivering these
trainings.

49
International Agencies : International organisations can jointly establish migrant workers
resource centres (MWRCs) in major receiving countries. These MWRCs can provide all kinds
of services including remittance information to the migrants of different labour sending
countries.

Coordination : It is well recognised that migration is a complex process with many

stakeholders. It involves various ministries of the government, private and nationalised
commercial banks, MFIs, migrant workers and members of their families. Effective coordination
among the actors is essential for enhancing the efficiency of migrant workers’ remittance. The
inter-ministerial coordination committee headed by the Minister for EWOE should incorporate
all the actors, government, private sector and the civil society.

Conclusions
Remittance inflow of Bangladesh is relatively stable in position with world remittance flow but
highly country specific, job specific and unskilled labor migration shows a very risky scenario
which is still not adequate to determine the sustainability of this remittance inflow.

To maintain a sustainable remittance balance, Bangladesh needs to country wise and sector wise
diversifies of its labor migration.

If Bangladesh migrate more skilled and professional labor its remittance inflow will increase
highly. If people migrate more through government media, where government is a powerful
player for job salary and opportunity negotiations, it will further accelerate the remittance inflow
of Bangladesh.

This paper looks into Bangladesh’s experience of migrants’ remittance management. The paper
underscores that remittance play an extremely important role in sustaining the economy. It is the
highest foreign exchange earning sector of the country. Macro economic growths in different
sectors 31 ranging from agriculture to service have direct correlation with migrants’ remittance.
It constitutes very important source of the country’s development budget and the amount
received through remittance is higher than foreign aid to Bangladesh.

The paper shows both long term and short term migration is common in Bangladesh. Data is
available on different aspects of short term migration, but there is no data on long term
migration. Figures indicate that number of short term migrants are increasing rapidly over the
years and market of Bangladeshi labour is changing all the time. Migration to certain countries
has reduced whereas some new countries of destination have emerged. In the early years of
short-term migration, skilled and professionals used to migrate more. Now Bangladesh has
created a niche in the unskilled and semi-skilled labour market.

Over the years, remittances have increased in absolute terms, although per capita a remittance
has declined. Both official and unofficial channels were used by migrants for sending
remittance. In recent times, various shortcomings of official channels have been addressed by
different policy measures. This may have resulted in increased flow of remittance through
official channels.
Ministry of Finance and Bangladesh Bank are the two most important institutions involved in
framing public policy concerning remittance. Besides, MoEWOE, MoFA, MoC, NSB, PC, BoI,
NCBs and PCBs are other important actors. BRAC Bank and RMMRU are the two non-
traditional players in the area of remittance.

50
There are two major regulatory instruments that affect remittance. These are Foreign Excange
Regulation Act, 1947 (As amended up to 1996) and Money Laundering Prevention Act 2002
(As amended in 2003). There is no specific provision on migrants’ remittance in the 1947 act.
On the basis of the principles laid down in the act, a guideline has been prepared by BB which
governs the migrants’ remittance. The money laundering act is particularly promulgated after the
9/11 with dual purpose. In one hand, to ensure surveillance on money laundering and on the
other hand, to ensure greater flow of remittance through official channel.

Since the return of the civilian regime in the 1991, successive governments have undertaken
various proactive measures to enhance flow of remittance through official channel. In order to
address the problem of difference between official and unofficial exchange rate, foreign
exchange in current account has been made free floating. The lead time in transfer has been
reduced substantially by limiting timeframe for transfer, greater introduction of electronic
transfer, ensuring accountability of nostro account, facilitating expansion of exchange houses
and correspondent banks, introduction of weekly and monthly evaluation and monitoring
system, providing information of NCBs, exchange houses and correspondent banks in the
website, and establishment of formal system of complaint. Along with the previous investment
instruments, the US Dollar Investment Bond and the US Dollar 32 Premium Bond have been
floated in late 2002. This for the first time has created opportunity for the migrants to invest in
dollar. Incentive packages are also offered by PC, MoC and Ministry of Communication to
encourage migrants’ foreign direct investment. National Bank and Islami Bank offer some
savings instruments that are useful for the migrants.

It was observed that most of the government investment opportunities available are targeted
towards the big investors. This may attract the long term migrants with large capital. Investment
need of short term migrants cannot be met through those. Besides, lowering the interest rates of
investment instruments in local market has left little opening for the remittance receiving
families, particularly for the elderlies. For those who want to invest in small enterprise, the
MELA programme of BRAC seems to be well suited. Nonetheless, it was found that
information on different packages offered is not easily accessible to the migrants.

The report reveals that the general perception about unproductive use of remittance by the
migrants may not be reflecting the empirical reality. Such observations may had been valid in
the late 1970s or the early 1980s. But studies show that in the 1990s, migrants’ have invested in
nutritious food for the family members, health, education, land purchase, financing migration of
other family members, construction of homestead and in business. The report concluded that the
migrant families tried their best to effectively utilise the remittances given the limited options
they had. Such endeavour did result in economic and social development of many migrant
families. A stocktake of civil society organisations show that large scale NGOs or MFIs did not
have any substantive programmes on labour migrants. Migrant workers’ associations were found
to be extremely active and committed to the cause. In Bangladesh, important studies have been
conducted that covered various aspects of migration including remittance.

51
 Appendix A
Bibliography

52
References:
1. Annual Report-2009 of Agrani Bank ltd.
2. Afsar, Rita, Mohammad Yunus and Shamsul Islam 2000 ‘Are Migrants Chasing
after the Golden Deer: A Study on Cost Benefit Analysis of Overseas
Bangladesh Bank 1998 Guidelines for Foreign Exchange Transactions:
Volume I, Dhaka.
3. Bangladesh Bank 2004 Economic Trends, May 2004, Volume XXIX, No.5,
Statistics Department, Dhaka.
4. Gammeltoft, P. 2002 “Remittances and Other Financial Flows to Developing
Countries”, International Migration Review 40 (5): 181-211.
5. GoB 1982 The Emigration Ordinance 1982 Dhaka Law Report.
6. GoB 2003 Annual Report-2002 Ministry of Expatriates’ Welfare and Overseas
Employment, Dhaka.
7. GoB 2003 The Money Laundering Prevention Act, 2002 (as amended in
2003), Dhaka.
8. GoB 2002 The US Dollar Investment Bond Rules, 2002, Internal Resources
Division, Ministry of Finance, Dhaka.
9. GoB 2002a The US Dollar Premium Bond Rules, 2002, Internal Resources
Division, Ministry of Finance, Dhaka.
10. ILO 2000 ‘Making the Best of Globalization’ concept paper presented at the
workshop on Making the Best of Globalization: Migrant Worker Remittances
and Micro-finance organised by ILO, Geneva, November.
11. ILO 2002 Migrant Workers, Labour Education 2002/4, No. 129, Geneva.
International Organization for Migration (IOM) 2000 World Migration Report
2000, Geneva.
12. IOM 2003 World Migration Report 2003, Geneva.
INSTRAW and IOM 2000 Temporary Labour Migration of Women: Case
Studies of Bangladesh and Sri Lanka, Santa Domingo.
13. Khan, I K 2002 ‘Migration of Workers from Bangladesh: Opportunities,
Challenges and Policies’ in Employment and Labour Market Dynamics: A
Review of Bangladesh’s Development, CPD and UPL, Dhaka, 2002.
14. Levitt, P. 2001 The Transnational Villagers, University of California Press,
Berkeley.
15. Mahmood, R A 1996 ‘Immigration Dynamics in Bangladesh: Level, Pattern
and Implications’, paper presented for the Asiatic Society of Bangladesh,
Dhaka.
16. Mahmood, R A 1998 ‘Globalization, International Migration and Human
Development: Linkage and Implications’ prepared for UNDP (Unpublished).
Mannan, M A 2001 ‘Bangladeshi Migrants in Saudi Lobour Market: an
Empirical Analysis’ RMMRU Dhaka.

53
17. Murshed, K A S, Kazi Iqbal and Meherun Ahmed 2000 ‘A Study on
Remittance Inflows and Utilization’, IOM, Dhaka (mimeo).
Orozco, M. 2003 “Workers’ Remittance in an International Scope”, Working
Paper commissioned by the Multilateral Investment Fund of the Inter-
American Development Bank, Inter-American Dialogue, Washington.
18. Quibria, M. G. 1986 ‘Migrant Workers and Remittances: Issues for Asian
Developing Countries’, Asian Development Review, Vol. 4.
19. Ratha, D. 2003 Workers’ Remittances: An Important and Stable Source of
External Finance, Global Development Finance 2003.
20. Siddiqui, T 2001 Transcending Boundaries: Labour Migration of Women from
Bangladesh, UPL, Dhaka.
21. WARBE 2001 ‘Migrant Workers’ Rights and Duties in Destination Countries’, in
RMMRU published Module on Labour Migration Process for Awareness Campaign
through Community Leaders and Activists, RMMRU, Dhaka.

54
Appendix B

55
 AGRANI BANK LIMITED
FOREIGN REMITTANCE MANAGEMENT DIVISION
STATEMENT OF COVER FUND RECEIVED AGAINST FOREIGN REMITTANCE UP TO : 09.11.2009

Remittance in
Remittance Received
SL     November'09
NAME OF EXCHANGE HOUSE
No     At Tota
2007 2008 Jul'08 Jul'09 Aug'08 Aug'09 Sep'08 Sep'09 Oct'08 Oct'09 Nov'08 Upto 08
09 l
14.5
1 Agrani Exchange House Singapore Singapore 398.09 504.46 41.94 44.54 29.09 37.28 35.46 39.24 21.71 40.64 25.35 14.56   6
2 Agrani Remitt. House Malaysia Malaysia 78.25 248.79 18.28 8.22 17.83 10.06 18.93 9.45 10.38 10.52 11.74 2.94   2.94
3 Al - Fardan Exchange Qatar Middle East 15.18 16.96 1.93 1.11 1.79 1.08 1.71 1.18 1.32 1.13 1.21 0.51   0.51
4 Al Falah Exchange UAE Middle East 0.68 6.80 0.54 0.97 0.81 1.02 0.55 1.03 0.48 1.23 0.81 0.34   0.34
Al Mulla International Exchange Co.
5 W.L.L Kuwait Middle East   32.70 0.00 7.05 0.00 8.93 9.98 7.36 7.69 7.82 9.05 3.20   3.20
6 Al-Ahlia Money Exchange Bureau UAE Middle East 26.95 45.83 3.12 7.96 3.25 7.37 4.35 6.65 4.79 7.09 4.47 2.33   2.33
7 Al Ansari Exchange Establishment UAE Middle East 33.99 43.79 3.97 4.61 3.49 4.95 4.43 6.45 3.42 4.45 3.69 0.86   0.86
8 Al-Fardan Exchange Company UAE Middle East 7.11 9.63 0.69 0.87 0.62 1.39 0.76 0.89 1.17 1.11 0.73 0.28   0.28
Al Muazaini Exchange Company
9 K.S.C.C Kuwait Middle East 7.66 34.57 2.52 3.22 3.66 2.74 2.76 3.11 2.76 3.21 3.82 1.49   1.49
Al-Rajhi Banking & Investment 1420.3 1698.1 27.5 41.3
10 Corporation KSA KSA 3 8 150.48 155.48 123.28 153.22 147.56 149.63 147.06 186.47 123.22 13.78 6 4
11 Al-Rajhi Commercial Foreign Exchange KSA KSA 6.84 0.00 0.00 0.00 0.00 0.00   0.00 0.00 0.00   0.00   0.00
21.1
12 Arab National Bank KSA KSA 225.38 359.70 33.27 51.13 33.23 47.70 32.37 47.31 32.18 55.20 34.34 14.30 6.80 0
13 Bahrain Exchange Company WLL Kuwait Middle East 286.07 327.78 32.49 23.38 28.74 21.32 33.05 28.90 22.57 19.27 28.06 5.17   5.17
14 Bahrain Financing Company Bahrain Middle East 24.15 17.39 1.75 0.53 1.13 0.52 1.06 0.43 1.22 0.46 0.82 0.15   0.15
15 Bank Al Bilad KSA KSA 501.71 561.68 55.13 40.93 50.66 29.58 40.09 32.34 47.35 41.29 31.48 8.96   8.96
16 Bank Dhofar Al-Omani Al Fransi Oman Middle East 0.13 0.05 0.00 0.00 0.05 0.00   0.00 0.00 0.00   0.00   0.00
17 CIMB Bank, Berhad Malaysia   6.43 2.83 0.00 0.00 0.00 0.00   0.00 0.00 0.00   0.00   0.00
18 City International Exchange Co. W.L.L. Kuwait Middle East 15.39 15.87 2.06 2.20 1.72 2.35 1.71 1.48 1.34 3.37 1.16 0.62 1.03 1.65
19 Comm. Bank of Kuwait Kuwait Middle East 1.43 0.18 0.00 0.00 0.00 0.00   0.00 0.00 0.00   0.00   0.00
20 Dollarco Exchange Co. Ltd. Kuwait Middle East 81.94 94.32 8.40 9.01 7.52 5.57 9.71 7.71 5.78 6.72 6.89 1.21   1.21
21 Eastern Exchange Establishment Qatar Middle East 15.25 11.87 1.11 0.80 0.94 0.72 1.33 0.75 0.74 0.68 1.18 0.19   0.19
22 Habib Exchange Compay L.L.C. UAE Middle East 46.38 49.88 3.85 3.25 5.75 3.55 4.25 4.00 3.75 4.15 4.50 1.50   1.50

56
 Remittance in
Remittance Received
SL     November'09
NAME OF EXCHANGE HOUSE
No     At Tota
2007 2008 Jul'08 Jul'09 Aug'08 Aug'09 Sep'08 Sep'09 Oct'08 Oct'09 Nov'08 Upto 08
09 l
Kuwait Bahrain International Exchange
23 Company Kuwait Middle East 188.44 154.81 14.02 10.33 10.95 11.70 7.89 9.29 15.04 10.66 14.55 4.48   4.48
24 National Exchange Co. Italy Europe 23.05 24.56 4.68 5.65 3.35 5.72 2.40 4.63 1.64 4.63 1.49 1.32   1.32
25 Oman & UAE Exchange Company Oman Middle East 5.61 12.33 0.94 1.33 0.86 1.53 1.14 1.66 1.11 1.27 0.97 0.21   0.21
26 Oman Exchange Company Ltd. Kuwait Middle East 77.70 81.15 7.19 5.16 7.39 3.79 6.51 4.40 5.81 3.17 5.96 0.83   0.83
27 Oman International Exchange L.L.C Oman Middle East 54.31 47.84 4.11 4.34 4.42 5.08 4.90 4.95 4.26 4.58 4.27 1.89   1.89
28 UAE Exchange Centre W.L.L Kuwait Middle East 10.73 12.72 1.13 0.52 0.51 0.83 3.59 0.66 0.62 1.00 1.02 0.14   0.14
29 UAE Exchange Centre L.L.C UAE Middle East 126.26 232.65 20.54 34.73 21.21 35.22 23.99 34.80 20.43 30.10 22.47 8.86   8.86
30 Wall Street Exchange UAE Middle East 47.88 51.86 3.41 6.04 4.26 6.54 5.13 7.39 4.36 5.16 4.10 2.24   2.24
31 Zenj Exchange Co.WLL Bahrain Middle East 96.78 122.41 12.65 8.94 10.26 9.96 12.35 5.16 11.62 8.25 8.90 2.07   2.07
32 MoneyGram Int. Inc. USA USA     7.53   9.55   10.79   10.56   4.24 2.02 6.26  
33 IME (M) Sdn Bhd Malaysia Malaysia           2.61   18.19   23.37   7.75   7.75  
34 Al Ghurair Exchange UAE Middle East           0.42   0.31   0.82   0.17   0.17  
35 Trans-Fast Remittance LLC USA Middle East           0.50   0.60   0.61   0.13   0.13  
36 Other Banks   Europe 421.33 444.55 29.53 12.74 16.93 13.71 32.04 18.42 38.37 12.34 59.48 4.22   4.22
4,251.4 5,268.1 37.4 148.
TOTAL     3 4 459.73 462.57 393.70 446.51 450.00 469.16 418.97 511.33 415.73 110.94 1 35

57
58