Bangladesh Bank (BB) has sent a proposal to increase the incentive in remittances by one percent more for those Bangladeshi migrant workers who are sending home US$500 or less, said a BB official.
At present, the government is giving two percent incentive to the expatriate income.
"We've send a proposal to the finance ministry recently to increase the incentive by one percent for those migrant workers who will send home US$500 or less to discourage them to use any illegal channel like hundi," said BB's chief spokesperson Serajul Islam.
In the letter BB said remittance fees need to be waived in a legal way to discourage expatriates from using hundi. Remittances from various banks in Bangladesh come from more than 300 exchange houses in different countries of the world.
"It is now under our active consideration. Further decision will be taken soon. If incentive is increased by one percent more, migrant workers earning small amounts and sending home money will get benefitted," said an official of the Financial Institutions Department of the Ministry of Finance.
Exchange houses in different countries charge different fees but it is difficult to make an adjustment. Therefore, the central bank has proposed to give an additional one per cent incentive in addition to the usual two per cent incentive for expatriates who send remittances of a maximum of US$500 or less per month.
The central bank said that at the meeting of the National Steering Committee on Expatriate Welfare and Overseas Employment on the directive of Prime Minister Sheikh Hasina, it was decided that it is necessary to coordinate with the opportunities given to the high-income expatriates.
In this regard, Bangladesh Bank has held meetings with 10 top remitter banks and banks owned by subsidiaries in different countries.
The government has increased its allocation for incentive expenses for remittance in the next fiscal year 2021-22.
The government has kept Tk 4,000 crore in FY22 to pay incentives to the beneficiaries of remittance.
In the original budget of the fiscal year of 2020-21, the government had earmarked Tk 3,060 crore to pay incentives to remittance sending migrant workers.
Remittance inflow hit a record high of $24.77 billion in the just-concluded fiscal year 2020-21.
Bangladeshi expatriates sent 36 percent more remittance in FY21 compared to the same period in the previous fiscal, when it was $18.20 billion, according to Bangladesh Bank data.