Bangladesh has become the laggard among four South Asian countries when it comes to attracting deposits and investments from its nationals living abroad, according to a report of the World Bank.

The country has a stock of $1.34 billion as deposits from non-resident Bangladeshis. Pakistan has a stock of $3.7 billion.

India has attracted the highest deposits among 15 developing countries from its non-resident nationals whose savings stood at $143 billion as of September this year.

Sri Lanka came second with deposits of $7.78 billion, said the Migration and Development Brief of the Global Knowledge Partnership on Migration and Development (KNOMAD), which is part of the Washington-based lender.

The WB said despite calls to increase private finance to address climate change, food insecurity, fragility, and other global challenges, private capital flows to the lower-middle-income countries (LMICs) have steadily decreased over the past decade.

Remittances are one of the few sources of private external finance that are expected to continue to grow in the coming decade.

"As debt indicators have worsened in the LMICs, and sovereign risks increased, countries may benefit from efforts to attract diaspora investors who may view investment opportunities in their countries of origin through a more favourable lens than do institutional investors from the global north," it said.

The report said many countries, notably India, have implemented savings programmes to attract foreign currency deposits from its non-resident citizens.

"Such deposits are usually repatriable, yield higher interest rates than comparable international interest rates and are tax-exempt," it said, adding that data on non-resident deposit schemes are not readily available, but such schemes are widespread among countries across developing-country regions.

Bangladesh is expected to receive $23 billion in remittances in 2023, up 8 percent year-on-year.

The report did not provide details about Bangladesh's initiatives to attract investment and deposits from NRBs.

The government has offered investment schemes -- the US Dollar Investment Bond (USDIB), the US Dollar Premium Bond (USDPB) and the Wage Earner Development Bond (WEDB) -- to attract NRBs.

The USDIB is issued against the foreign remittance in the foreign currency accounts. One can repatriate the principal as well as interest from the investment. Invested funds and earned interests are also tax-exempted, according to the Bangladesh Bank.

Investors will get a 5 percent interest at maturity after three years against investments of $1 lakh.

The USDPB is issued in favour of foreign currency account-holders who hold foreign remittances in their accounts. Investors can repatriate the principal amount after maturity but the interest against the invested amount is only payable in the taka.

Investors will receive a 5.5 percent interest after the maturity of the three-year bond. Invested funds and earned interests are also tax-exempted.

The WEDB is another diaspora bond issued only in the taka against remittances. The earned profits are payable in the local currency and the invested funds and interests are tax-exempted.

The taka-denominated five-year bond offers a 12 percent interest after maturity. Any amount up to Tk 1 crore can be converted against foreign remittance.

The WB report said globally, there are many successful cases of diaspora bond issuances, notably those of India and Nigeria. The Philippines has raised bond financing from its overseas foreign workers, and Pakistan has a diaspora savings certificate now under issuance.

However, the amount raised by developing countries via diaspora bonds has so far been minuscule compared to the volume of remittance inflows. There remains enormous potential to tap diaspora savings, the brief added.

The report also said diaspora bonds have not always been successful.

Ethiopia, Nepal, and Kenya issued diaspora bonds, but they did not succeed in raising the amount of funds expected.

In Nepal, it said, the interest rate was too low and the bond was in the local currency and thus subject to the currency risk.