Banks to transfer incentive to accounts of remitters
Banks will transfer incentive to the bank accounts of remitters or their beneficiaries like they do in case of exporters as the maiden budget allocation for the hard-working migrant workers became available from yesterday.
A finance ministry official told The Daily Star that it would send a guideline to the central bank regarding the incentive on remittance.
For the first time, the government has introduced an incentive, which is 2 percent, on the money remitted by expatriate Bangladeshis with a view to encouraging the inflow of remittance through legal channels. The government has allocated Tk 3,060 crore for the purpose in the current fiscal year.
The official said banks will pay an additional 2 percent to the remitters when they disburse the money to the bank accounts of the recipients.
For example, if an expatriate sends Tk 100, the respective bank will disburse Tk 102 in favour of the beneficiary account. Later, the bank will claim the additional payment with the central bank.
At present, commercial banks disburse incentives to exporters when their earnings enter the country.
A Bangladesh Bank official, however, said because of the incentive, money will be laundered from Bangladesh through hundi and the same money will enter the country again as remittance.
Subsequently, the central bank sent an opinion on the incentive, expressing apprehension on the misuse of the fund. In the opinion, the central bank said no agreement or document is required between a remitter and the recipient to transfer the remittance. Banks pay the remitted funds to the accounts of the relatives directly.
On the other hand, exporters have to submit documents on exports when they claim the incentive. If any wrongdoing is noticed, there is scope to recover the money. Jamuna’s operating profit increased 17 percent. Most of the private banks emphasised trade-based financing because of their ongoing liquidity crisis, said a Bangladesh Bank official.
As a result, the low private sector credit growth did not impact their profitability. Private sector credit growth sank to a 56-month low of 12.07 percent in April.
The recent hike in interest rate on lending played a role in increasing the bank’s operating profit, said Ahsan H Mansur, executive director of the Policy Research Institute.
“But operating profit does not reflect the actual scenario of banks as they have to maintain provisioning and pay tax out of the sum.”
After the deductions the banking sector’s net profit may shrink this year given the upward trend of default loans, he said. At the end of March, default loans stood at record Tk 110,874 crore.
The central bank has recently relaxed its loan classification policy and that helped banks get additional time to classify their loans, said Khondker Ibrahim Khaled, a former deputy governor of the central bank. The relaxed policy may help banks to achieve profits, he added.
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