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Bank Trust Crisis and Remittance Trends: Insights from RAMRU

Bank Trust Crisis and Remittance Trends: Insights from RAMRU-Photo Meeting Of RAMRU

Remittances, the financial lifeline that connects families across borders, play a critical role in sustaining global economies. These financial transfers not only serve as an important source of income for households but also contribute significantly to the overall Gross Domestic Product (GDP) of countries. However, the economic landscape of Bangladesh is currently witnessing a worrying trend of declining remittance flows. This slowdown is closely linked to the loss of confidence in the country’s banking system, which has been highlighted by the Refugee and Migratory Movements Research Unit (RAMRU). Specializing in the migration sector, RAMRU unveiled critical insights on the matter in a press conference held on January 31.

As households depend on remittances for their daily livelihood and countries rely on these funds for economic growth, any disruption in the smooth flow of remittances can have far-reaching consequences. Bangladesh, a country with a significant number of citizens working abroad, is grappling with declining remittance flows, posing challenges not only to individual households, but to the country’s broader economic stability.

Insights provided by RAMRU, a private research institute renowned for its expertise in the migration sector, shed light on the multifaceted factors contributing to this decline. From the erosion of trust in banking institutions to the return of migrants and the dynamics of informal remittance channels, the complexities of this problem are both complex and influential. As the global community navigates an evolving economic landscape, understanding the nuances of remittance trends becomes paramount, making RAMRU’s press conference findings an important focus for policymakers, economists and the general public alike.

  1. Loss of confidence in banks:

The foundation of any strong financial system rests on trust, a quality that has taken a significant toll on banking institutions in Bangladesh. Declining confidence in these financial entities is the primary catalyst for the decline in remittances witnessed in recent times. Ramru’s insightful analysis points to the profound impact of this loss of trust, which permeated the psyche of migrants, significantly influencing their decisions regarding formal channels of remittances.

The impact of this lack of confidence extends beyond the immediate concerns of the banking sector. While institutions are grappling with the decline in the use of formal remittance channels, the country’s broader economic stability faces a consequent challenge. Migrants, concerned about the safety and reliability of traditional banking channels, are increasingly turning away from these systems, seeking alternative means of transferring funds.

Loss of confidence in banks not only jeopardizes the financial well-being of numerous households dependent on remittances but also disrupts the overall economic infrastructure. As the backbone of economic stability weakens, the impact is felt across sectors from consumption to investment, creating a ripple effect that resonates throughout the national economy. Recognizing the urgency of rebuilding this confidence becomes imperative for policymakers and financial institutions alike, to restore confidence in the banking system and ensure the sustainment of vital remittance flows.

  1. Return of Migrants:

The ebb and flow of migration patterns are integral to the dynamics of remittance-dependent economies, and Ramru’s findings shed light on a resulting shift. The research institute’s insights point to a clear phenomenon: a significant number of migrants who once sought opportunities abroad are now retracing their steps in Bangladesh. The motivations behind this reverse migration encompass a spectrum of diverse, personal, economic and global factors.

Ramru’s nuanced analysis emphasizes the nuanced nature of this return journey, stressing that 12 percent of migrants chose to return to their homeland. This migration reversal directly contributes to the observable decline in remittance flows. As these individuals reintegrate into the domestic workforce or face circumstances that require their return, the financial support they once provided through remittances diminishes, affecting not only their individual households but also the broader economic landscape.

Reasons motivating migrants to return vary and may include economic challenges abroad, global employment dynamics or even personal considerations. Whatever the motivating factors, the consequences of declining contribution of remittances to the national economy are clear. The correlation between migration trends and remittance dynamics highlights the interconnectedness of global labor movements and their profound implications for individual livelihoods and economic stability in Bangladesh. Policymakers and stakeholders must carefully navigate these changes, developing strategies that balance the needs of returning migrants with the need to maintain important remittance flows.

  1. Hundi Transactions:

Amid the declining use of formal remittance channels, a significant lifeline emerges in the form of ‘hundi’ transactions, an informal yet resilient alternative that plays an important role in maintaining financial stability in Bangladesh. As traditional means witness the decline, Ramru’s perceptive analysis brings to the fore the resilience of hundi transactions, acting as a buffer against a potentially more severe economic downturn.

Hundi, an ancient system of informal money transfer, operates outside the conventional banking framework. Ramru’s recognition of this alternative remittance mechanism highlights its key role in maintaining a certain level of fiscal balance in the country. Although formal channels experienced a slowdown, hundi transactions continued, serving as a testament to the adaptability of individuals seeking to navigate economic challenges.

The effectiveness of hundi transactions in averting a deeper economic crisis lies in its immediacy and accessibility. These alternative systems, often rooted in community trust and personal connections, provide migrants with a way to send funds without relying on formal banking institutions. In doing so, it overcomes the challenges posed by the loss of confidence in traditional channels, ensuring a continuous flow of financial support to families in Bangladesh.

While hundi transactions offer a remedy, it is imperative for policymakers to recognize and regulate these informal practices. Balancing the need for financial stability with the need for regulatory oversight is essential to harnessing the benefits of hundi while mitigating potential risks. As the economic landscape evolves, recognizing the role of alternative remittance systems becomes integral to formulating comprehensive strategies to address the multifaceted challenges facing Bangladesh.

  1. Appreciation of dollar against rupee:

Among the complex factors affecting remittance trends, Ramru’s report points to a significant contributor to the decline – the appreciation of the US dollar against the Bangladeshi taka. This exchange rate dynamic, as workers continue their migration efforts, emerges as a significant constraint, overshadowing the overall growth of remittance flows to Bangladesh.

Acknowledgment of the reported appreciation of the dollar against the rupee explains an important aspect of the remittance puzzle. The effect of currency appreciation is particularly pronounced, affecting the purchasing power of remitted funds. When workers abroad send money home, the strength of the US dollar increases, thereby reducing the value of remittances when converted into local currencies.

This exchange rate challenge not only affects the financial contributions received by Bangladeshi households but also complicates the broader economic landscape. Since remittances constitute a significant portion of national GDP, any disruption in their growth has cascading effects on consumption patterns, investment opportunities and overall economic buoyancy.

Navigating the complexities of this currency valuation demands a nuanced approach from policymakers. Measures to mitigate the impact may include adopting hedging strategies, encouraging economic policies that attract foreign investment, or exploring diplomatic means to stabilize the exchange rate. Recognizing the inherent nature of global currencies and their impact on remittance values is essential to formulating strategies that enhance economic resilience and ensure the continued well-being of the Bangladeshi people.

  1. Migration trends and market dynamics:

Amidst the complexity of the immigration sector, the report not only uncovers challenges but also illuminates a positive narrative. Bangladesh, amidst adversity, has witnessed the highest migration rate in the last 48 years, marking a milestone for the nation. This increase is attributed to the post-Covid strategic reopening of businesses in countries that actively accept migrants, and the increase in quotas for Bangladeshi migrants.

A recovery in economic activity abroad has acted as a catalyst, driving an upward trend in immigration numbers. As businesses in migrant-receiving countries slowly reopen, especially after the global pandemic, they point to a worker from Bangladesh. Additionally, the decision to increase the quota for Bangladeshi immigrants in various institutions has fueled this migration wave.

However, against this encouraging growth in migration is the grim reality of modest growth in remittances. This contrast between the significant increase in the number of migrants and the relatively modest increase in remittance statistics raises legitimate concerns about the sustainability of this trend. While the influx of Bangladeshi workers into various global markets is evidence of the resilience of the country’s labor force, economic benefits at the grassroots level, as reflected in remittances, appear to be inconsistent.

As Bangladesh charts its course through these migration trends and market dynamics, it becomes imperative for policymakers to address the causes of this disconnect. Policies that not only encourage migration but also optimize the positive impact on remittances are critical to ensure that the benefits of labor mobility translate effectively to sustainable economic growth and stability in the country.

  1. Quality Migration Concerns:

In a speech on immigration, Salim Reza, an astute member of the National Human Rights Commission, took a critical view, expressing reservations about the quality of immigration, particularly to destinations such as Korea and Japan. While the economic attractiveness of these countries may promise substantial earnings for immigrants, Razer’s concerns highlight underlying challenges, particularly the frequent job changes that immigrants often face.

The concerns raised by Reza emphasize the multifaceted nature of migration beyond financial gain. Although migrants can indeed earn appreciable amounts, the sustainability and stability of their employment presents significant challenges. Frequent job changes not only disrupt migrants’ employment continuity but also create challenges for employers in these destination countries, resulting in a mismatch between labor demand and supply.

Maintaining a delicate balance in the labor market dynamics of countries such as Korea and Japan becomes essential to avoid potential difficulties in the immigration process. Razer’s insight draws attention to the need for cooperative efforts between sending and receiving countries to ensure a harmonious and mutually beneficial migration experience. Addressing the root causes of job switching, perhaps through increased regulation or fostering better understanding between employers and migrants, becomes an important step to protect the rights and well-being of the workforce engaged in cross-border employment.

As migration continues to be an important component of global labor mobility, the call to prioritize the quality of the migration experience resonates as a reminder for policymakers and stakeholders to take action that promotes stable, secure and dignified employment for migrants. A win-win scenario for both sending and receiving countries.


Ramru’s comprehensive report serves as a compass, guiding our understanding through the complex landscape of remittance dynamics and migration trends in Bangladesh. The findings not only illuminate the challenges faced but also identify important considerations that demand immediate attention for sustainable growth of the country’s economy.

The release of the report on the lack of confidence in the banking sector serves as a stark reminder that the country’s financial backbone needs to be strengthened. Rebuilding trust in formal remittance channels becomes a priority, ensuring that migrants feel safe sending their hard-earned money through established banking institutions. Collaborative efforts between governments, financial institutions and regulatory agencies are essential to address this trust gap, creating an environment where remittance flows can grow.

Exchange rate dynamics, particularly the appreciation of the US dollar against the Bangladeshi taka, emerges as another key challenge. Policymakers must navigate this terrain with finesse, implementing strategies to mitigate the impact of currency fluctuations on remittance prices. Hedging mechanisms, diplomatic engagement, and economic policies aimed at stabilizing exchange rates are essential to protect the value of remittances and, consequently, the economic well-being of recipient households.

The positive rise in immigration, although appreciable, requires a short-term approach to ensure its sustainability. Concerns have been raised about the quality of migration, particularly in countries such as Korea and Japan, emphasizing the need for strategic cooperation between sending and receiving countries. Balancing labor supply and demand, addressing issues such as frequent job turnover, and promoting the well-being of migrant workers are integral to sustaining the positive effects of labor migration on the Bangladesh economy.

As Bangladesh navigates these challenges, the call for collaboration among policymakers and stakeholders resonates loud and clear. A concerted effort is needed to create an environment that will not only remove existing barriers but also propel the country towards strong remittance flows and sustainable economic growth. It is through this concerted effort that Bangladesh can harness the potential of its migrant labor force, ensuring that the benefits of labor migration contribute significantly to the nation’s prosperity and resilience.

Billal Hossain
Billal Hossain
Billal Hossain, a seasoned professional with a Master's degree in Mathematics, has built a rich and varied career as a banker, economist, and anti-money laundering expert. His journey in the financial sector has seen him in leading roles, notably in AL-Rajhi Banking Inc. in the Kingdom of Saudi Arabia and as Foreign Relations and Correspondent Maintenance Officer of Bank-AL-Bilad. Beyond the confines of traditional finance, Billal has emerged as a prominent writer and commentator, contributing thought-provoking columns and theses to various newspapers and online portals. His expertise spans a wide range of important global issues, including the complexities of economics, political dynamics, the plight of migrant workers, remittances, reserves, and other interrelated aspects. Billal brings a unique analytical perspective to his writing, combining academic rigor with practical insights gained from his banking career. His articles not only demonstrate a deep understanding of complex issues but also provide readers with informed perspectives, bridging the gap between theory and real-world application. Billal Hossain's contributions stand as a testament to his commitment to unraveling the complexities of our interconnected world, providing valuable insights that contribute to a broader and more nuanced understanding of the global economic landscape.


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