High fees cost country $1b last year

Remittance transfer
High fees cost country $1b last year
Few multinational financial institutions and banks are churning out a huge amount of money from the expatriate Bangladeshi workers in different parts of the world by charging high fees for transferring their remittances, according to a finance ministry report, NewAgebd quoted.
The amount of money would be no less than US$ 1 billion (Tk 6,900 crore) last year as Western Union, Money Gram and Citi Bank—global leaders in money transfer business—charge fees ranging between 8.3 per cent and 13 per cent, finance ministry sources said.
Bangladesh received around US$ 10 billion in foreign exchange in 2009 from 6.3 million expatriate workers.
Experts observed that the fees are significantly higher for impoverished Bangladesh which is heavily dependent on workers’ remittances for meeting its balance of payment needs.
Ranked as one of the top ten countries receiving remittances from their workers, Bangladesh witnessed an impressive growth of more than 20 per cent on remittances in recent years.
The finance ministry report on ‘Cost of Remittance Transfer’ disclosed that Western Union, Money Gram and Citi Bank charged $40, $25 and $30 for transferring $300 from the US and other remittance generating countries, especially the oil rich Arab countries.
Sensing the high growth of remittances, Western Union, a global leader in money transfer business, has increased its outlets in Bangladesh by eight folds in last several years. It has now 3,900 outlets in the country whereas the number was less than 500 in 2006.
The finance ministry report observed that amount of remittances could be higher as a large share is still believed to be flowing through informal channels. The high fees encourage many expatriates to use informal channels for sending remittances which remain excluded from the national account.
A number of recommendations were suggested by the finance ministry to reduce the remittance fees.
The authorities would like to see greater use of electronic means for money transfer than through money orders and drafts.
The finance ministry recommended for allowing more financial institutions for remittance transfer business for increasing competition among them which in turn would help reduce remittance costs. It also wanted automation of the clearing houses.
The finance ministry observed that the remittance recipients should have accounts in US dollar or in any other international currency. This would help the recipients to receive the same amount of remittance sent by the migrant workers.
Besides, the ministry suggested that the recipients would have option to convert the funds into local currency by choosing the banks or financial institutions that offer the best exchange rates.

Courtesy of NewAgebd