1.0 INTRODUCTION

1.1 Background

The remittance issue creates increasing attention in recent years for its significant contribution

in our national economy by increasing our foreign currency reserve. Our government gives most

emphasis on foreign remittance to keep macro economic balance. To increase the flow of

foreign remittance government established Expatriate Welfare Ministry and took different

incentive programs through nationalized commercial banks. By the Influence of this program, all

the commercial banks try to attract expatriates with their offerings for remitting money. In the

recent survey, it has been found that some banks manage remittance in efficient manners while

some do not. Prime Bank has recently taken up several strategic initiatives for the growth of

remittances from Bangladeshi expatriates. The most significant action is to open its own

exchange houses abroad. The other steps include setting up the branches in remote areas to

expand delivery channel, forming an alliance with other local banks for faster delivery of

remittances, and reaching a wider section of beneficiaries. This report focuses on remittance

management of Prime bank and its impact on socio economic aspects of Bangladesh. The

report also provides a guideline in handling foreign exchange houses.

1.2 Objectives

The objectives of the report are:

To visualize the performance of Prime Bank Limited. in terms of remittance management

To find out the causes involved in delaying remittance procedures.

Impacts of remittances on socio-economic aspects of Bangladesh.

To evaluate the performance of Prime Bank in handling different foreign exchange houses

and identifies the areas of improvements in this regard.

1.3 Methodology

For this report, data will be collected from different primary and secondary sources.

Primary Sources of Data:

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Discussion with concerned personnel of Bangladesh Bank (foreign exchange cell), foreign

exchange department of Prime Bank Limited (Banani Branch), International Division

(Remittance cell) of Prime Bank Limited., Planning Commission, CPD, BIDS etc. through set

questionnaire.

Secondary Sources of Data:

Literature review on various articles regarding Remittance

Bangladesh Bank Economic Review

Foreign Exchange Guideline given by Bangladesh Bank

Annual reports of Prime Bank Limited

BIDS journals

Different web sites on remittance

Other published documents on foreign exchange operation

1.4 Scope of the Study

Study will encompass the foreign exchange operation in the context of Bangladesh. The subject

matter will only be limited to remittance (inward & outward). For the second part of the report,

only Prime Bank’s Foreign exchange houses will be dealt with.

1.5 Limitations

Regarding inward remittance only workers are considered and for outward remittance

education, medical, travel and consultancy included.

Only official data of remittances are considered for the analysis. However, remittance figures

may also vary depending on the inclusion of hundi and non-cash items into account

In this report, only the exchange houses, which is linked with Prime Bank is considered.

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2.0 AN OVERVIEW OF PRIME BANK LIMITED

2.1 Background

With the economic liberalization and financial sector reforms, a group of highly successful local

entrepreneurs conceived an idea of floating a commercial bank with different outlook. Prime

bank is the reality of that idea. Three corner stones of prime bank are competence, excellence

and consistent delivery of reliable service with superior value products. Prime Bank has been

registered under the companies Act 1993 as a Public Limited Company on February 12, 1995

with its registered office at 5, Rajuk Avenue, Motijheel Commercial Area, Dhaka-1000,

Bangladesh. Later on, the office had been shifted to Adamjee Court (annex building), Motijheel

Commercial Area. It started operation from April 17, 1995 with a commitment to play some

social role in addition to normal banking. Its slogan is “Prime Bank Limited – a bank with a

difference". From the very beginning, the bank has adopted the policy of diversifying its

business. To achieve this objective, the bank started Consumer Credit Scheme, Lease

Financing, Hire Purchase and Loans in general, Secured Overdrafts etc. Under the dynamic

leadership of the PBL’s top management, the bank earned profit within December 1995 and

raised its reserve. The bank started operation its business through four branches. Now its

branches stand at Forty three.

Prime Bank had paid up capital of Taka 1000 million till 2004. On February 7, 2005 the bank

increased its authorized capital to Taka 4000 million by passing a special, resolution in the

bank’s annual general meeting. At present, Managing Director is Mr. M. Shahjahan Bhuiyan,

who has a long experience in domestic and international banking. The bank has made a

significant progress within a very short time due to its very competent board of directors,

dynamic management and introduction of various customer-friendly deposit and loan products.

At present bank has 13 Directors, including the Chairman. The bank holds the first position in

the CAMEL rating, published by Bangladesh Bank for the last consecutive five years.

2.2 Vision of the Bank

“A Bank with a difference” is the motto of Prime Bank Limited. So, the motto itself is self-

explanatory to deliver the vision of the bank. Prime Bank limited is prepared to meet the

challenge of the 21st century well ahead of time. To cope with the challenge of the new

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millennium it hired experienced and well-reputed banker of the country from the inception. The

bank has efficient and dedicated professional and equipped with modern technology to provide

the best service in the need of the people and thus to realize its vision.

Vision: “to be the most efficient Bank in terms of customer service, profitability and technology

application.”

Mission: “continuous improvement in our business policies and procedures, cost reductions

through integration of technology at all levels.”

2.3 Objectives of the Bank

The objectives of the Prime Bank Limited are specific and targeted to its vision and to position

itself in the mindset of the people as a bank with a difference. The objectives of the Prime Bank

Limited are as follows:

To mobilize the savings and channeling it out as loan or advance as the company approve

To establish, maintain, carry on, transact and undertake all kinds of investment and financial

business including underwriting, managing and distributing the issue of stocks, debentures,

and other securities

To finance the international trade both in Import and Export

To carry on the Foreign Exchange Business, including buying and selling of foreign

currency, traveler’s cheque issuing, international credit card issuance etc.

To develop the standard of living of the limited income group by providing Consumer Credit

To finance the industry, trade and commerce in both the conventional way and by offering

customer friendly credit service

To encourage the new entrepreneurs for investment and thus to develop the country’s

industry sector and contribute to the economic development

2.4 Management of the Bank

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Board of Directors is the sole authority to take decision about the affairs of the business. Now

there are 13 directors in the management of the bank. All the directors have good academic

background and have huge experience in business. Capt. Imam Anowar is the Chairman of the

bank. The board of directors holds meetings on a regular basis.

2.5 Departments of PBL

If the jobs are not organized considering their inter-relationship and are not allocated in a

particular department, it would be very difficult to control the system effectively. If the

departmentalization is not fitted for the particular works there would be haphazard situation and

the performance of a particular department would not be measured. Prime Bank Limited has

done this work very well.

2.5.1 Logistic & Support Services Division (L&SSD)

This Division was formerly known as General Services Division (GSD). Its main functions relate

to procurements and supply of all tangible goods and services to the Branches as well as Head

Office of Prime Bank Limited. These include:

Every tangible functions of Branch opening such as making lease agreement, interior

decoration etc.

Print all security papers and Bank Stationeries

Distribution of these Stationeries to the Branch

Purchase and distribute all kinds of bank’s furniture and fixtures

Receives demand of cars, vehicles, telephones etc. from branches and different divisions in

Head Office and arrange, purchase and delivery of it to the concerned person / Branch

Install & maintain different facilities in the Branches

2.5.2 Financial Administration Division (FAD)

Financial Administration Division mainly deals with the accounting part of the Bank. It deals with

all the Head Office transactions with bank and its Branches and all are controlled under the

following heads:

2.5.3 Credit Division

The main function of this division is to maintain the Bank’s Credit Portfolio. A well-reputed and

hard working group of executives & officers run the functions of this division. These functions

are as follows:

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1. Receiving proposals

2. Proposing and appraising

3. Getting approval

4. Communicating and sanctioning

5. Monitoring and follow-up

6. Setting price for credit and ensuring effectiveness of it

7. Preparing various statements for onward submission to Bangladesh Bank

2.5.4 International Division

The objective of this division is to assist management to make international dealing decisions

and after decision is made, guide Branches in their implementation. Its functional areas are as

follows:

1. Maintaining correspondence relationship

2. Monitoring foreign rate and exchange dealings

3. Maintaining Nostro A/Cs and reconciliation

4. Authorizing of signing and test key

5. Monitoring foreign exchange returns & statements

6. Sending updated exchange rates to the concerned Branches

2.5.5 Computer Division

Prime Bank operates and keeps records of its assets and liabilities in computers by using

integrated software to maintain client Ledger and general Ledger. The main function of this

division id to provide required Hardware and Software.

2.5.6 Public Relations Division

It has to perform certain functions related to all types of communication. The broad routine

functions can be enumerated as follows:

Receiving and Sanctioning of all advertisement application

Keeping good relation with different newspaper offices

Inviting concerned ones for any occasion

Keeping good relation with different officers of electronic media

2.5.7 Marketing Division

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Marketing Division is involved in two types of marketing:

Asset Marketing: Marketing of assets refers to marketing of various kinds of loans and

advances. In-order to perform this job, they often visit large organizations and attract them to

borrow from the bank to finance profitable ventures.

Liability Marketing: The process of Liability marketing is more or less same as Asset marketing.

In this case different organizations having excess funds are solicited to deposit their excess

fund to the bank. If the amount of money to be deposited is large, the banks sometimes offer a

bit higher price than the prevailing market rate.

2.5.8 Human Resources Division

HRD performs all kind of administrative and personnel related matters. The broad functions of

the division are as follows:

1. Selection & Recruitment of new personnel

2. Preparation for all formalities regarding appointment and joining of the successful

candidates

3. Placement of human resources

4. Dealing with the transfer, promotion and leave of the employees

5. Training & Development

6. Termination and retrenchment of the employees

7. Keeping records and personal file of every employee of the Bank

8. Employee welfare fund running

9. Arranging workshops & training for employee & executives

2.5.9 Inspection & Audit Division

Inspection and Audit division works as internal audit division of the company. The officers of this

division randomly go to different Branches to examine the necessary documents regarding each

single account. If there is any discrepancy, they inform the authority concerned to take care of

that/those discrepancies. They help the bank to comply with the rules and regulation imposed

by the Bangladesh Bank. They inform the Bangladesh Bank about the Current position of the

rules and regulation followed by the Bank.

2.5.10 Credit Card Division

Prime Bank obtained the principal membership of Master Card International in the month of May

1999. A separate Division is assigned to look after this card. The Marketing Team of this

division goes to the potential customers to sell the card. Currently Prime Bank Ltd. offers four

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types of cards: Local Silver Card, International Silver Card, Local Gold Card and International

Gold Card. Recently Prime Bank has obtained the membership of VISA credit Card.

2.5.11 Merchant Banking and Investment Division

This division concentrates its operation in the area of under writing of initial public offering (IPO)

and advance against shares. This division deals with the shares of the Company. They also

look after the security Portfolio owned by the Bank. The Bank has a large amount of investment

in shares and securities of different corporations as well as government treasury bills and prize

bond.

2.6 Product and Services

If the memorandum and articles of association of the Prime Bank Limited is revised its area of

operation is clearly written. The product of PBL is targeted to fulfill that aim. The product and

services that are currently available are given below.

2.6.1 Depository Products

Prime Bank Limited is now offering 14 depository products for mobilizing the savings of the

general people. There are also accounts for force saving from the exporter that is called

Reserve Margin from the export bill.

Depository Products

1. Contributory Saving Scheme

2. Monthly Benefit Scheme

3. Special Deposit Scheme

4. Education Saving Scheme

5. Fixed Deposit

6. Saving deposit Account

7. STD Account

8. PBL-Insured Fixed Deposit Scheme

9. Prime Bank Money Scheme

10. Multi Currency Account

11. Foreign Currency Deposit Account

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12. Non Resident Taka Account

13. NFCD Non Resident Foreign Currency Account

14. Non Residents Investors Account

Table 1: Depository products of PBL

2.6.2 Loan Products

The prime bank is offering the following loan and advance product to the client for financing

different purpose that fulfill the requirements of the bank and have good return to the investment

as well as satisfy the client. The loan and advance products are as the following:

Loan Products

1. Consumer Credit Scheme

2. Lease Finance

3. Hire-Purchase

4. Small & Medium Enterprise

5. House Building Finance Scheme

6. Computer Software Financing Scheme

7. Prime Bank Master Card Credit Card

8. Prime Bank Visa Credit Card

9. Working Capital Financing

10. Import Financing

11. Export Financing

12. Industrial Financing

Table 2: Loan products of PBL

2.7. Foreign Exchange Business

The Bank has done a significant amount of Foreign Exchange business and that played a vital

role in the overall performance of the bank. Total import and export business transacted was Tk.

40303 million and 28882 million during 2005. The growth rate of the import business was 10%

and the main items of industrial machineries, raw materials, commodities and other consumer

products. The growth rate of export business was 48% percent and the items of export were

RMG, Shrimp, Jute, Leather, Tobacco, Bone Crust, Betel-Nut etc. The remittance department is

the efficient one in the banking industry.

Source: Annual Report of Prime Bank Limited, 2005

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3.0 REMITTANCE

3.1 Remittance

Remittance basically indicates sending money to someone at a distance or funds transferred

from one party to another. Although remittances can also be sent in-kind, the term “remittances”

usually refers to Cash transfers.

3.2 Types of Remittance

Remittances can be sent between or within countries. International remittances are those

earned by migrants, who left their home country, whereas intra-national Remittances are earned

by persons who migrated within their country of origin. Almost all remittances are sent by

individual migrants (individual remittances), yet a fraction is sent by groups of migrant workers

through their associations (collective remittances). Since intra-national remittances are not

reflected in the International Monetary Fund’s (IMF) Balance of Payments (BOP), it is difficult to

assess their size. Formal remittances are sent through banks, post offices and exchange

houses and transfer companies. Common facilities for such transfers include demand drafts,

traveler’s cheques, telegraphic transfers, postal orders, account transfers, ATM facilities or

electronic transfers. Informal transfers generally take place through hand-carriage, family,

friends, or money couriers. Besides, some countries have extensive and efficient systems to

facilitate such informal transfers. The hundi system in Bangladesh may be the most renowned

informal transfer system. When remittances are sent through the informal system, there is also

the danger that payments are deliberately delayed, to make profits or to temporarily use the

funds for personal purposes.

3.3 Workers Remittance

Workers remittances are defined as the sum of three components: (a) workers’ remittances

recorded under the heading “current transfers” in the current account of the balance of

payments; (b) compensation of employees which includes wages, salaries, nonresident workers

(such as local staff of embassies) and which are recorded under the “income” subcategory of

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the current account; and (c) migrants’ transfers which are reported under “capital transfers” in

the capital account of the International Monetary Fund.

3.4 Sources of inward Remittance

From the non-immigrant working group earning foreign currency abroad who frequently

sends their earning to their family living at Bangladesh

From the immigrant expatriates through their frequent visit to Bangladesh and through

Investment

People working in home country but being paid in foreign currency; for example working in

foreign companies or international organization located in Bangladesh

Inflow of foreign currency earned from the investment abroad or in international market by

the foreign currency earners; dominantly by foreign wage earners

3.5 Sources of outward Remittance:

Travel (including air fair)

Medical Purpose

Education

Consultancy fees of foreign expert

Dividend

3.6 Process of remittance

A typical remittance transaction takes place in three steps: (1) initiation of remittances by a

migrant sender using a sending agent, (2) exchange of information and settlement of funds, and

(3) delivery of remittances to the beneficiary. In step 1, the migrant sender pays the principal

amount of remittance and service charges to the sending agent using cash, check, money

order, credit card, debit card, or a debit instruction sent through email, phone, or internet

banking. In step 2, the sending agency – could be a bank or another financial institution, a

moneychanger then instructs its agent in the recipient country to deliver the remittance to the

beneficiary. In step 3, the paying agent makes the payment to the beneficiary. In most cases,

there is no real-time fund transfer; instead, the balance owed by the sending agent to the paying

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agent is settled periodically according to a mutually agreed schedule. The settlement is mostly

carried out using commercial banks through the national clearing and settlement systems.

3.7 Channels of remittance transfer

Bangladeshi migrants use both official and unofficial channels to transfer their remittances from

host countries. Demand drafts issued by banks or exchange houses, travelers cheques,

telegraphic transfers, postal orders, account transfers, automatic teller machine (ATMs)

facilities, electronic transfers, purchase of financial instruments, transfers in kinds, etc. are some

of the official means of remittances used by Bangladeshi migrants. Bangladesh Bank (BB)

permits banks in Bangladesh to establish drawing arrangements with foreign banks and

exchange houses for facilitating remittance by Bangladeshi nationals living abroad. Persons

willing to remit their earnings through official channels can buy either taka draft or US dollar

draft from these foreign banks and exchange houses having drawing arrangements with

different banks in Bangladesh. Now a days, Bangladeshi nationals living abroad can send

foreign currency very easily and directly to their own bank accounts maintained in Bangladesh

or to their nominated persons/ relatives’ bank accounts maximum by three days.

Besides the official channels, Bangladeshi migrants also employ unofficial channels and the

most common of the unofficial channels of transfer is hundi or hawala or money courier. In

addition, sending cash back with returning migrants or by carrying cash and/or goods when

migrants return home is also very common in practice.

3.8 Importance of Remittance in Bangladesh economy

Remittances were one of the least volatile sources of foreign exchange earnings for developing

countries. For that reason workers’ remittances have become an increasingly prominent source

of external funding for many developing countries like Bangladesh. Remittances are an

important source of revenues for Bangladesh. Remittances are often invested by the recipients,

particularly in countries with sound economic policies. Improvements in policies and relaxation

of foreign exchange controls in the 1990s may have encouraged the use of remittances for

investment.

While capital flows tend to rise during favorable economic cycles and fall in bad times,

remittances appear to react less violently and show remarkable stability over time. For example,

remittances to developing countries continued to rise steadily in 1998–2001 when private capital

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flows declined in the wake of the Asian financial crisis. Even the more stable components of

capital flows—FDI and official flows—declined in 2000–01, while remittances have continued to

rise. Remittances intended for consumption (by recipient households) should be less volatile

than those intended for investment. Migrants may increase remittances in times of economic

hardship, especially in low-income countries where their families may depend significantly on

remittances as a source of income and may live at close to subsistence levels.

Remittances augment the recipient individuals’ incomes and increase the recipient country’s

foreign exchange reserves. If remittances are invested, they contribute to output growth, and if

they are consumed, then also they generate positive multiplier effects. Inward remittances are

believed to have a positive impact on savings and investment.

Source: Economic Trends, Bangladesh Bank & Bangladesh Economic Survey, Ministry of

Finance, GOB,

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4.0 Remittance system of Prime Bank

4.1 Product of Prime bank to attract Remittance

Prime Bank provides various products for the welfare of expatriates. These are:

a) Repatriable foreign currency accounts:

Non -Resident Foreign Currency Deposit (NFCD): NRBs can open accounts in the

country in foreign currency. The principal and interest of NFCD are repatriable in foreign

currency and the account can be maintained for an indefinite period of time.

Wage Earners Scheme (WES): Offers a premium exchange rate to the conversion of

foreign currency balances into local currency (TAKA)

b) Foreign currency bonds:

Prime bank uses foreign currency denominated bonds as a tool for stimulating remittances.

Foreign currency bonds are similar to repatriable foreign currency accounts in that the money

invested is repatriable without being subject to the foreign exchange regulations.

The wage earners development bond

The us dollar premium bond

4.2 Steps taken by prime bank in facilitating remittance procedures

Prime bank has taken several important measures to successfully conduct the remittance

services:

Establish centralized remittance cell

Install new software

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Agreement with more nationalized and private banks

Establish its own exchange house

Organize branches for handling remittance at a large scale (eg. well trained manpower,

equipment)

Instant cash payment over the counter (If the beneficiaries do not have bank account, the

payment is given with the help of pin numbers which is given by the remittance

company/agency)

4.3 Performance of Prime Bank in remittance management

In remittance management, Prime Bank is quite successful in compare with the past. The

principle reason was to create a centralized remittance cell, where the entire payment request

from abroad processed with the help of a team of twenty five (25) employees and then send the

information to the relevant branches for crediting the beneficiary’s account.

In Million USD

Prime Bank Limited

Year Inward Remittance Outward Remittance

2000 41.25 19.95

2001 65.67 30.24

2002 120.35 73.45

2003 145.89 120.51

2004 170.34 89.44

2005 209.40 103.49

2006* 326.25 90.75

* Projected for the whole year based on Four months’ data

Table 3: Remittance flow of PBL

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Remittance Flow of Prime Bank Limited

0

50

100

150

200

250

300

350

2000 2001 2002 2003 2004 2005 2006

Year

Mil

lio

n U

SD

Inward Remittance

Outward Remittance

Figure: 1 Remittance flow of PBL

From the figure above, we can see the upward trend in remittance inflow through the prime

bank over the last six years. On the other hand, outward remittance is much lower than the

inward figure. In the existing system, still there is a significant drawback prevailing which is the

absence of on line banking system. Recently prime bank has taken initiatives to introduce online

banking system, which will be in effect within next six month. The Head of centralized

remittance centre frequently visits potential foreign countries to draw the arrangement with

exchange houses and commercial banks. He also makes liaison with the community leaders of

the Bangladeshi dominated state of the foreign country. As a result, the growth rate of inward

remittance of last year is 55.80 %. Prime Bank officials’ review their performance on remittance

by weekly basis and necessary action has taken to improve it.

4.4 Factors affecting the choice between the formal and informal

channels of remittance

Individual socio-economic characteristics of the recipient and sender

Levels and type of economic activity in the sending and host countries

Differential interest and exchange rates and the relative efficiency of the banking system

compared with informal channels (Russell 1992; Straubhaar, 1986).

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Beside this, the prevailing infrastructures, information about the market, cultural practices, level

of competitiveness and level of government intervention also influence the choice of transfer

method (Orozco, 2003). In Bangladesh, informal channels of transfer, despite their negative

sides, is because many migrants want to avoid paper work at the sending and receiving ends

and/or some migrants staying illegally or have temporary working permit, do not have access to

a bank account. As for the official modes of transfer, demand draft is the mast popular one as

telegraphic transfer is often found to be time consuming and as electronic transfer requires a

high volume of transaction along with relatively size of transfers to ensure the validity of the

system.

4.5 Factors delaying the inward remittance

Delays in cheque clearance within Bangladesh

Delays in sending for the senders country due to exchange losses

Improper disclosure of transaction

Procedural and operational delay in making TT, DD for sending the money to the respective

client.

Some rural banks deliberately keeping TT, DD for enjoying its foreign currency reserve

status.

Point to be noted that there is almost no procedural delay in outward remittance.

4.6 Facilities given by the Government to expatriates

Bangladesh government provides various incentives to the NRBs. Besides these, the tax

structure and foreign currency regulations have been relaxed to encourage investment from

remittances. The expatriate Bangladeshis are given all the benefits similar to that to the foreign

investors. At the same time they also enjoy certain special benefits like 10% quota in initial

public offering (IPO). Government has taken several incentive programs for attracting

remittance:

More than 3000 numbers of housing plots have been allotted to the expatriates/ workers

in a government housing project.

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Ministry of expatriates welfare and overseas employees has made an arrangement with

RAJUK to distribute some flats of NAM villa to the expatriate Bangladeshis and price will

be paid in foreign currency

4.7 Flow of inward Remittance to Bangladesh

An analysis of worker remittances to Bangladesh is provided below which shows an upward

trend in remittance inflows. These statistics are based on remittances coming in via official

channels.

Country-Wise Workers' Remittances to Bangladesh (2002-2006)

(In Million USD)

Regions/Countries FY 02 FY 03 FY 04 FY 05

FY 06

(1st qtr)

Gulf Region 1,915.3 2,211.7 2,413.9 2,553.7 725.9

Saudi Arabia (1) 1,148 1,254 1,386 1,416.5 422.4

UAE (3) 233.5 327.4 373.5 425.3 110.2

Qatar 90.6 113.6 113.6 130.9 37.8

Oman 103.3 114.1 118.5 126.1 35.2

Kuwait (4) 285.8 338.6 361.2 390.5 103.2

Bahrain 54.1 63.7 61.1 64.4 17.1

Euro Region 109.4 229.8 309.6 559.3 98.0

UK (5) 103.3 220.2 297.5 549.6 94.9

Germany 6.1 9.6 12.1 9.7 3.1

Asia Pacific Region 75.3 90.7 88.2 85.8 19.7

Singapore 14.3 31.1 32.4 46.1 12.7

Japan 14.1 18.2 18.7 15.2 2.2

Malaysia 46.9 41.4 37.1 24.5 4.8

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Rest of the World 401.1 529.8 560.3 649.2 227.4

USA (2) 356.2 458.1 467.8 535.9 183.3

Other 44.9 71.7 92.5 113.3 44.1

Total 2,501 3,062 3,372 3859 1,071

Increase in remittances

(%) 22% 10% 14%(Expected)

12 %

Table 4: Country-Wise Workers' Remittances to Bangladesh

Source: Economic Trends, vol xxxi No.4, 2006, statistics department, Bangladesh Bank

The upward trend in inward flow of remittance has been crucial as a major source of foreign

exchange earnings for Bangladesh and, hence, in improving the current account position. The

banking sector reforms initiated by Bangladesh Bank, especially those targeted at facilitating the

transfer of remittance, plus measures and incentives to divert the inflow of remittance through

formal channels are primarily responsible for this.

The inward remittance flow through the official channel reached a record high of USD 3.85 bln

during FY 05 with a growth rate of 14% over that in FY 04. The foreign exchange remittances

from Bangladeshi nationals working abroad increased by US$ 28.03 million or 7.08% to US$

424.02 million during February, 2006 as against US$ 395.9 million during January, 2006. During

July, 2005- February, 2006 remittances increased by US$ 576.3 million or 23.79% to US$

2998.88 million as compared to US$ 2422.54 million during July, 2004- February, 2005.

Normally in our country, inward remittance increases in the festival month (Eid festival) and

outward remittance increases in the winter season because huge amount of dollars is endorsed

for travel purpose. Though for education, health and consultancy purpose outflow of remittance

is occurs but still we get huge surplus in our remittance sector .The current account balance

registered a surplus over the last few years primarily because of strong export performance,

inflow of capital in form of foreign investment and foreign aid, and most importantly, increasing

flow of remittance.

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4.8 Flow of outward Remittance in Bangladesh

The outward remittance, which includes in current transfer of BOP, is increasing over the last

few years because of transfer of profit of multinational organizations to abroad.

In million US$  

Items 2001-02 2002-03 2003-04 2004-05 FY 06, Q1

Trade balance -1768 -2215 -2319 -394

Export f.o.b.

(including EPZ)

5929 6492 7521

Of which :

Readymade garments

(RMG) 

4584 4912 5686

Import f.o.b. (including

EPZ)

-7697 -8707 -9840

Services -499 -691 -874 -158

Receipts 865 887 924

Payments -1364 -1578 -1798

Income -402 -358 -374

Receipts 50 64 63

Payments -452 -452 -437

Of which : Official

interest  payments

-161 -167 -175

Current transfers 2826 3440 3743 4056 936

Official 69 82 61 72

Private 2757 3358 3682 3984

Of which : workers'

remittances

2501 3062 3372 3859

Source : Statistics Department, Bangladesh Bank

Table 5: Flow of outward Remittances of Bangladesh

4.9 SWOT Analysis related to Remittances flow

SWOT analysis is a very effective framework of identifying strengths and weaknesses and of

examining the opportunities and threats faced and help to focus on future activities into areas

where the strengths exist and the greatest opportunities lie. In this light, a SWOT matrix related

to the dynamics of remittances is presented below:

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Strengths

Numerous constructive measures by BB to override the bottlenecks in sending remittances

through official channels.

Reduction of the rate of commission on remittances from NRB’s.

Implementation of electronic fund transfer system for remittances from USA, UK, Italy and

Middle Eastern countries

Opening of foreign remittance monitoring cells by different banks.

Actions against Hundi specifically and money laundering in generally.

Offering of a special VIP card, gold card and silver card to certain migrants using official

channels.

Weaknesses

Increased consumption of non-productive goods like consumer goods.

Increase of inequality of households in rural and especially in urban areas.

Widespread use of unofficial channels due to lack of banking facilities and unfamiliarity with

banking procedures.

The 1982 immigration ordinance, the main regulatory instrument of the GoB, not reflecting

the dynamics of current world labor market.

The fraudulent practices committed by unscrupulous private recruiting agents and their sub-

agents playing negative impacts on labor migration from Bangladesh.

Opportunities

Increased demand for foreign labor in many countries

Scope to enhance the ways of estimating total remittances (especially by encouraging the

use of formal channels).

Scope to increase the multiplier effect of remittances in terms of increased locally purchased

goods and other productive investments.

Threats

Sharp competition from largely populated and/or new labor exporting countries even at

lower rates of wages and salaries.

Introduction of close monitoring by the USA on remittances from there to the Muslim

countries after the incident of September 11, 2001

Increasing cost of migration to foreign destinations.

21

5.0 IMPACTS OF REMITTANCES ON SOCIO-ECONOMIC

ASPECTS OF BANGLADESH

The amount of remittance income, the decision whether or not to remit, the amount of remit, the

uses of remittance incomes etc. are considered to be influenced by the several factors like

number of workers in a household, wage rates prevalent in the host country, economic activity

in the host country and in the sending country, exchange rates in the recipient country, relative

interest rate between the labor sending and receiving countries, political risk factors in host

countries, facility for transferring funds, duration of stay abroad, skill level of the migrants etc.

The other major socio-economic conditions and demographic characteristics that also have

impact on the pattern and use of remittance incomes include initial status of remittance

receiving house holds (e.g. house hold income level) marital status, level of education of the

migrant, etc. The impact of remittances on macro-economic aspects is easier to comprehend

than that on micro-economic level especially in case of Bangladesh where data are not so

structured and inadequate in supply.

In recent times, remittances have contributed significantly in macro-economic context of

Bangladesh. This country suffers from chronically weak foreign trade account, due to the poor

prices it receives for its traditional staple exports of jute, jute products and tea coupled with its

dependence on imports for essential and capital goods. In fact, ready-made garment, which

today is Bangladesh’s largest export item accounting for nearly 75 % of total exports, requires a

high proportion of imported items. Remittances are contributing in increasing the foreign

currency reserve and paying for imports.. Remittances constitute 30% of the country’s national

savings (Annual report of Center for Policy Dialogue, 2005)

Unfortunately studies on the impact of remittances on the wider community level in Bangladesh

are quasi non-existent. The studies on the utilization of remittances do shed some light on the

impact of remittance on the household level. However, due to the lack of comprehensive studies

it is very difficult to determine the precise utilization of remittances. The only available studies

are very region specific micro-level studies and indicate that at the micro-level, remittances have

resulted in improved living standards of workers families and helped in improving the income

distribution in favor of poorer and less-skilled workers. The extents to which remittances will add

to the investment resources of the economy depend on the savings and expenditure patterns of

migrants and their families at the individual level. Studies indicate that the savings rate of

remittances receiving households are found to be significantly higher than that of non-receiving

households belonging to a similar income group. It has been noticed that the willingness to

invest in community development initiatives seems to be very small. In the available micro-level

22

studies, there is hardly any evidence of migrant workers who want to make investments in the

wider community. Some other interesting findings from the studies reveal that

The higher the level of skills the higher the level of expenditure

Unskilled migrants spend more on gifts, donations, assistance to relatives, etc. than a

professional or semi-skilled worker.

A semi-skilled worker spends more on payment of loans, liquidation of debts, etc. than the

professional.

Most part of the remittances is spent on consumption of food, clothing etc.

There are some factors that affect the use of remittances (some examples are summarized

in the table below)

Factors and the use of remittance

incomes

CORRELATION

Ownership of land prior to migration and

land purchase

Positive

Quality of living accommodation of a

household prior to migration and bank

savings

Negative

Marital status of a migrant and investment

in trade or business

Negative

Spending on basic needs, education,

health care, etc. and investment in local

productive investments

Negative

Economic condition prior to migration and

emergency resources

Positive

Level of skills and level of expenditure on

luxury goods

POSITIVE

Table 6: Factors that affect the use of remittances

Factors affecting the use of remittances:

Some negative aspects of remittances highlighted as follows:

Remittances in Bangladesh led to rising inequality and impoverishment in some areas.

There can be superficial signs of inflation due to remittances (as seen in Sylhet)

Remittances from the Middle East to Chittagong are used for buying social status, and

purchasing land leading to concentration of landownership, and a sudden increase in the

price of land.

23

Generally the analyses of the impacts of remittances on the migrants domestic economies

focuses exclusively on official record flows and their effects on the various economic aggregates

in the formal economy. In reality, official recorded remittances usually fall short of actual

overseas savings (potential remittances) of migrant workers and that the difference is of

particular significance in countries which have trade and exchange-rate restrictions and

unstable domestic economies, the true magnitude of unrecorded remittances and their

economic implications have received comparatively little attention. However in the recent times,

the use of official channels of transfer has increased since money – laundering act is being

strictly implemented in different countries to check illegal transactions. But sometimes

commissions, fees and exchange rates are not always clearly communicated to remitters or

beneficiaries and that affect the use of official channels. Besides, the remittance transfer sector

in the country is characterized by limited competition and low transparency.

At the moment there is insufficient information on the dynamics behind the utilization of their

remittances, but studies reveal that in Bangladesh majority part of the remittances is used for

consumption rather than investment purposes. Insecurity tends to be the main motivator for not

doing investment. Apart from that, lack of promotional support in terms of information, advisory,

training and other services, lack of knowledge relating to investment in new and potentially

successful sectors, perceived lower risk in the purchase of land and construction of houses,

high priority attached to household expenditure, lack of expertise in the remittance receiving

households for running business, etc. are some of the primary reasons for Bangladeshi

migrants not investing in productive ventures. Besides, it is difficult to convert migrants with no

prior business experience into dynamic entrepreneurs. It thus seems to be much more realistic

to introduce financial intermediaries that capture remittances as deposits and channel them to

existing small business rather than transforming migrants directly into entrepreneurs.

24

6.0 FOREIGN EXCHANGE HOUSES

6.1 Exchange Houses

Exchange Houses basically a financial intermediaries through which people living abroad can

send Local currency / Foreign currency directly to their own bank accounts maintained in

Bangladesh or to their nominated person's / relative's bank accounts in Bangladesh.

Bangladesh Bank permits banks in Bangladesh to establish drawing arrangements with

Exchange Houses for facilitating remittance by Bangladeshi nationals living abroad. Persons

willing to remit their earnings through official channels can buy either Taka draft or US dollar

draft from these Exchange houses having drawing arrangements with different banks in

Bangladesh. Furthermore, recently banks have taken some major steps towards crediting the

proceeds of remittances to the beneficiary's account promptly, maximum by 3(three) days.

6.2 Exchange houses that have drawing Arrangement with Prime Bank

1. Al-Rajhi Commercial Foreign Exchange, Jeddah, K.S.A

2. Financial Institutions Group, Kuala Lumpur, Malaysia.

3. Lari Exchange Company, UAE

4. UAE Exchange, UAE

5. Habib Exchange Company, UAE

6. Federal Exchange Company, UAE

7. IRS Exchange Limited, UK

8. Zarco Exchange ( UK ) Limited

9. Neno LLC, USA

10. Placid NK Corporation, USA

11. Rupali Exchange Company Inc, USA

12. National Exchange Company SRL, Italy

6.3 Criteria for selecting the foreign exchange houses

Country status

Quality of services rendered

Financial strength

Reputation in home country

Number of International Business Offices in the home country of exchange house.

6.4 Benefits of the exchange house

25

No account required

Less charge compare to the banks.

6.5 Reason for establishing own Exchange House by Prime Bank in

Singapore

In order to increase Inward remittance and to meet the acute demand of Foreign exchange

Prime bank is working with over 450 Foreign correspondents to handle the foreign exchange

business/ imports/ exports and routing of inward remittances from around the world. As it has

been observed that there has been sizeable Bangladesh expatriates/ workers working in Middle

East, Singapore, UK, USA etc. But the number of Exchange House operating in Singapore at

this moment is far less than the actual number of exchange house to be required comparing the

total number of Bangladeshi workers.

A big chunk of remittance from Bangladeshi workers are being handled by the Hundiwala only

due to acute absence of proper channel of remittance in Singapore which is the ultimate

opportunity and it is very much possible if it can handle through proper banking channel and

ensure proper service among the Bangladeshi workers. HUNDI Business are only the

threat/obstacle to this business which can be eliminated / reduced by an effective and proper

awareness development drive among the community of Bangladeshi workers/ employees which

are presently working in Singapore. Prime Bank also plan to establish five more exchange

houses in UAE, Malaysia, Saudi Arabia, UK and USA.

Exchange rate will be minimized

Speedy and smooth service

Banks foreign currency reserve will be high

6.6 Cost element of sending remittance

The cost of transferring remittance in the official channel included service charge, postal charge

and conveyance. The average transaction cost is Tk. 210 per transaction from UAE to

Bangladesh. For hundi the cost involved fax, phone and/or postal charges. The average

transaction cost for hundi was less than the banking channel and is about Tk. 70 for the same.

Cost is not the major factor when people need speedy transaction, less paper work and

confidentiality.

6.7 Factors affecting the pricing of sending Remittance

26

Pricing of Remittances are differentiated by a number of characteristics like Origin and

destination, speed of service, security of the transfer and the general customer experience both

when sending and receiving the funds. Empirical evidence shows that an increase in the

number of competitors generally decreases the price and improves the service quality. The

price a consumer has to pay for a remittance depends on a number of market factors:

The number of competitors in the market, which also depends on the size of that

particular remittance corridor and on legal regulations.

The cost to remittance providers, which depend on the method and technology used.

Customer needs and preferences, which may include choices available depending on

the required speed, the needs at the destination, as well as the sender’s legal

status.

Consumer’s awareness of choices.

6.8 Cost of Remittance providers

The following cost components relating to remittances are generally considered: Staff,

technology/ telecom, foreign exchange risk and supply of currency, location costs,

administration, laundering, security and marketing.

Although some remittances are paid in the same currency as they were originally sent in, but

most remittances are paid in the local currency at destination, which makes a conversion

necessary. Remittance companies convert the original amount sent into that local currency at a

rate that gives them a profit, which is covering the risks involved with the fluctuation of

currencies and the cost of providing cash at destination. This difference in the conversion rates

(spread) is often in the range of 1 – 3 % of the amount sent.

In developing countries, the majority of remittance receivers are unbanked, so they generally

have to receive their funds in cash. Systems not requiring locations like account-based systems

or on-line systems are generally generating less cost and tend to be cheaper priced as well.

Administrative costs including costs for anti-money laundering are typically covered as part of

overhead costs. Some banking personnel have mentioned that cost increased due to anti-

money laundering measures taken since Sept 11, 2001.

6.9 Other Official channel of remittance

27

Many remittance companies like Western Union, MoneyGram and Vigo accept cash as the

principal method of payment by the sender. The information is then forwarded by electronic

means to the paying agent, who generally pays to the beneficiary in cash. The settlement for all

performed transfers in a given time period is then calculated in a proprietary system and settled

via a single netting bank transfer. Banks offering remittance services tend to move money

between accounts, but in developing countries, only a minority of people has bank accounts.

Hawala is an alternative or parallel remittance system. It exists and operates parallel to

'traditional' banking or financial channels. Generally, the sender pays in cash and the

beneficiary also receives cash. The information is relayed by phone, fax or email. Most

interesting part of this system is the extreme simplicity of communications and settlement. The

components of hawala that distinguish it from other remittance systems are trust and the

extensive use of connections such as family relationships or regional affiliations. Hawala works

by transferring money without actually moving it.

6.10 The reason for choosing hawala

A large number of immigrants prefer or need to pay cash without the necessity of an

account for the sender or the beneficiary.

The second reason is cost effectiveness. Some of the reasons for this cost effectiveness

namely low overhead, exchange rate speculation and integration with existing business

activities.

The third reason is efficiency. A hawala remittance takes place in, at most, one or two

days. This can be contrasted with the week or so required for an international wire

transfer involving at least one correspondent bank.

The fourth reason is reliability. Complex international transactions, which might involve

the client's local bank, its correspondent bank, the main office of a foreign bank and a

branch office of the recipient's foreign bank, have the potential to be problematic.

The fifth reason is the lack of bureaucracy.

The sixth reason is the lack of a paper trail.

The seventh reason is tax evasion. 

6.11 Measures taken by Bangladesh Bank

28

It has been observed that several factors that work for a large portion of remittance to flow

through unofficial channel. These include efficiency of the hundi channel, smuggling, exchange

rate differentiation, need for recruitment fees in the destination countries, collusion of interest

between business, banks and hundi operators. Detailed discussions with high officials of central

bank and other financial institutions lead us to believe that there is a growing awareness about

the need to develop proper strategies and gear existing financial institutions, both government

and privately for mobilization of resources. In that context, the Bangladesh government has

adopted several policy measures through Bangladesh Bank that include encouraging

Bangladeshi banks to open correspondent relationships with financial institutions in the

destination countries, developing and liberalizing the existing financial instruments to attract the

migrant remittances and promoting remittance by allowing it tax free status.

It was found that the government banks such as Sonali and Janata could not play desired roles

in the UK and UAE respectively as they were handicapped by disbursement of loans on extra-

financial considerations. Although correspondent relationship with banks and exchange houses

has increased substantially, but still management of private banks believe that the authorities

are unduly favouring government banks, by not allowing private banks to open branches in

cities where Bangladeshi government banks are functioning.

6.12 The performance of prime bank in handling different foreign

exchange houses

The three main sources of foreign currency are - import, export and remittance. Banks profit

also varies depending upon the composition of the foreign currency portfolio of the three

sources. One of the reasons of legging behind in remittance business of local private banks

could be absence of foreign branches. The tremendous growth of remittance of prime bank

depends on some factors such as, strong customer focus and responsiveness, cordial

relationship with the commercial banks and exchange houses, the competitive pricing strategy,

and spot payment for avoiding delay. Client evaluation has been taken informal way to clarify

their attitude towards the exchange houses. Client attitude towards the exchange houses

system is positive and for that now a days the volume of hundi getting lesser. Prime bank also

has the legal rights to deny the faulty or wrong transactions by giving 2 months notice to the

exchange houses but before that all transactions must be settled with.

7.0 CONCLUSION

29

It is well acknowledged that the migrants have been playing an important role in changing the

scenario of the socio-economic condition of Bangladesh. Mostly with the intention of

employment and enhanced future earnings, mentionable number of both rural and urban

Bangladeshis of all classes and races has continued to migrate internationally and

consequently, flow of inward remittances is increasing over-time. Remittances from

Bangladeshis working abroad have marked a steep rise during the nineties due to a massive

outflow of workers from Bangladesh. As an export item, manpower export currently occupies the

second position with an annual inflow of over US$ 1 billion and thus remittances have now

become a key factor in stabilizing Bangladesh’s balance of payments.

Bangladesh could be one of the most promising avenues for optimizing the development impact

of remittances if proper initiatives are adopted to encourage transfer of remittances through

official channels and utilize those in various investment ventures.

8.0 RECOMMENDATION

30

Existing system of remittance management of Prime Bank Limited should be updated by

introducing on line banking system to speed-up the remittance procedures and keep pace

with modern banking system. Government can play a significant role in this context to

develop a uniform system for remittance procedures in the commercial banking sector. The

following recommendations are given below for smoothing the remittance sector.

Recognize remittance as a self-standing industry different from banking and thus

broaden the number of players.

Harmonize regulations governing remittances within the country.

Establish foreign branches.

In Bangladesh, collateral and other licensing requirements as well as operational

requirements like reporting should be identical.

Improve remittance channels.

Improve customer awareness:

Consumers are only likely to use a specific remittance if they are aware of it. It can be

assumed that the consumer will choose between the available whichever option is best,

taking into account the price and the service provided. Prime Bank can inform about its

Remittance cost to the customer through their exchange houses and also by electronic

and print media. Introducing common instrument, which will be honored by all the banks

operating in Bangladesh.

Offer special VIP card, gold card and silver card to certain migrants using official

channels.

To minimize the exchange rate risks :

Prime bank can offer the remitter spot exchange rate (provided by the Central Bank of

Bangladesh) at the time of disbursement.

31

Bank should use different Currency Instruments to hedge its risk regarding fluctuation in

exchange rate.

For better dealing with exchange houses Prime bank Limited should give more emphasis on

the following matters:

Bank should be more careful in the fund management with the exchange houses.

Number of delay occurred through the Exchange Houses

Create customer awareness about the exchange houses and its cost and benefit by

taking an aggressive marketing strategy (use print and electronic media)

Number of amendment required through Exchange Houses

KYC (know your customer) should be robust enough but customer friendly to protect the

illegal flows of fund.

By introducing pre-paid cards, Bank can give beneficiaries access to their money

anywhere and around the clock.

32

9.0 REFERENCES

1. The Prime Bank Ltd web site: www.primenet-bd.com

2. Bangladesh Bank web site: www.bangladesh-bank.org

3. Credit manual of The Prime Bank Ltd

4. Annual report of The Prime Bank Ltd

5. Kennickell, Arthur et al.: Recent Changes in U.S. Family Finances: Results from the

Survey of Consumer Finances, Federal Reserve Bulletin, Vol. 86, No. 1, January 2000,

pp. 1-29. This study shows that most

http://www.reservebank.co.za/internet/Publication.nsf

6. El Qorchi, Maimbo, Wilson: Informal Funds Transfer Systems: An Analysis of the

Informal Hawala Systems, IMF, 2003

7. Interpol has also published a very extensive description of hawala systems:

http://www.interpol.int/Public/FinancialCrime/MoneyLaundering/hawala/#3

8. Cajori, Florian (1993 reprint of the 1928/9 original) A History of Mathematical Notations,

Mineola, New York: Dover.

9. Chohan, Ali Hassan (1995) Practical Dictionary, English to English & Urdu; Urdu to Urdu

& English, Lahore: Oriental Book Society.

10. Cowan, J. M. [editor] (1976) Arabic-English Dictionary, The Hans Wehr Dictionary of

Modem Written Arabic, Ithaca, New York: Spoken Language Services.

11. Gala, L.R., Shah, B. L, and Gokani, L. B. (1998) Gala's Desk Dictionary: English-

English-Gujarati & Gujarati-Gujarati-English, Ahmadabad and Bombay: Gala/Navneet

Publications (I) Limited.

12. Gonzalez, Patricia (1997) 'Ex-Corona Man Guilty of Laundering Drug Money; 68-year-

old Aided International `Kingpin'' The Press-Enterprise (Riverside, California), July 4,

1997.

13. Gupta, Suraj B. (1992) Black Income in India. New Delhi: Sage Publications.

14. Jost, Patrick (1997) 'Black Hawala, Financial Crimes and the World Drug Trade' in

Jayasuriya, D.C., Nayak R. K. and Wells, A. (editors) Global Drugs Law: Selected

Papers Presented at the Indian Law Institute/UNDCP International Conference on

Global Drugs Law, New Delhi, 28 February-3 March 1997. New Delhi: Har-Anand

Publications. This paper is also available from the U.S. Department of the Treasury,

Financial Crimes Enforcement Network (Fin CEN), Office of Communications, 2070

Chain Bridge Road, Suite 200, Vienna, VA 22182 USA.

33

15. Kapoor, Sanjay (1996) Bad Money, Bad Politics: The Untold Hawala Story. New Delhi:

Har-Anand Publications (Alka Paperbacks).

16. Maharaja, Jagadguru Swami Sri Bharati Krsna Tirthaji (1997) Vedic Mathematics. Delhi:

Motilal Banarsidass.

17. Malhotra, Angelina (1995) 'India's Underground Bankers' Asia, Inc. Online/Asia, Inc.

August 1995.

18. McGregor, RS. (1993) the Oxford Hindi-English Dictionary, Delhi: Oxford University

Press.

19. Menninger, Karl (1992 reprint of the original 1969 translation by Paul Broneer) Number

Words and Number Symbols: A Cultural History of Numbers [Zahlwort and Ziffer: Eine

Kulturgeschichte der Zahlen] Mineola, New York: Dover Publications.

19. Pathak, R. C. [compiler] (1995) Bhargava's Standard Illustrated Dictionary HindiEnglish.

Varanasi: Bhargava Book Depot.

20. Manuel Orozco, Attracting remittances: Market, money and reduced costs, Report

commissioned by the Multilateral Investment Fund of the Inter-American Development

Bank, January 28, 2002

21 Journal of Business administration, vol 31, No. 3 & 4, Article of Rubayat Jesmin “Is

Migrants’ Remittances” A potential tool for the development of Bangladesh Economy?

22 Bruyn, D.T. and Kuddus. U. (2004), Dynamics of Remittance utilization in Bangladesh.

23 Centre For Policy Dialogue (2005). State of the Bangladesh Economy: Early Signals for

FY 2005

24 Government of Bangladesh (1998). Labour Force Survey, Bangladesh Bureau Of

statistics, Dhaka

25 Mahmud, W. (1989). The Impact of Overseas labour Migration on the Bangladesh

Economy: A Macro- Economic perspective

26 Siddiqui, T. and Abrar, C. R. (2001). Migrant Workers Remittances and Micro-finance

Institutions.

34

Annexure

35

Questionnaire on

Analysis of remittance (inward &outward) and Handling of different foreign exchange

house transactions (Prime Bank perspective)

KINDLY NOTE THAT THIS IS AN ACADEMIC STUDY AND THE FINDINGS WILL REMAIN CONFINED

WITHIN ACADEMIC INTERESTS. I WOULD HIGHLY APPRECIATE YOUR KIND COOPERATION.

Please read the following questions carefully and just put a tick (√) in the respective box (□) and

kindly give your judgments where necessary.

Name of the Bank:

Designation of the Respondent: ---------------------------- ------------------------------------

Q1. What are the sources of inward remittance to Bangladesh?

Q2. What are the sources of outward remittance in Bangladesh?

[Please turn over the page]

36

Q3. What is the percentage of total remittance of the country earned by prime bank for the

last 5 years?

Q4. What are the factors delaying the inward remittance?

Q5. What are the factors delaying the outward remittance?

Q6. What are the measures taken by Prime bank in facilitating remittance procedures?

Q7. Do you think any modification is required in existing system?

Yes No

If yes, what are they?

[Please turn over the page]

37

Q8. Do you think Govt. can play role in this regard?

Yes No

If yes, how?

Q9. What is the main function of exchange house?

Q10. How many exchange houses do you have?

Q11. Give the name of your foreign exchange houses that you linked with?

[Please turn over the page]

38

Q12. What are the criteria you are considering in selecting the foreign exchange houses?

Q13. Are the exchange houses have significant impact in speeding up the inward remittance?

Yes No

Q14. Do commercial bank requires any Bangladesh Bank permission in establishing &

handling foreign exchange houses?

Yes No

Q15. Have you done any feasibility study before making formal contract with foreign exchange

houses abroad?

Yes No

Q16. What are steps bank can be taken to perform better in handling different foreign

exchange houses abroad?

[Please turn over the page]

39

Q17. Is there any review process for analyzing the performance of your bank in terms of

remittance management?

Half-yearly Yearly

Q18. Is client evaluation is considered in the measurement of exchange house performance?

Yes No

Q19. How the standard for performance is established (Who set the standard)?

Bank itself Bangladesh bank Others

Q20. Client attitude to the exchange house system is-

Positive (Cooperative) Negative

Q21. Did you have any different types of money transferring system?

Yes No

Q22. If yes, why was it changed?

Invalid Unreliable Inconsistent Others

[Please turn over the page]

40

Q23. Do you have any future plan in establishing your own exchange house?

Yes No

If yes, why:

Q24. Are there any legal rights for bank to deny the faulty or wrong transactions made by

exchange house?

Yes No

Q25. How do you feel about the existing exchange house system?

Bank benefits Bank can not benefit

Finally, in your opinion what prime bank can do for improving remittance Procedures

***Thank you***

41

42