Migrant Worker Remittances and Micro-finance in Bangladesh

This report assesses the scope and origin of migrant remittances in Bangladesh. It examines the current role of financial institutions in transferring remittance and the macroeconomic background against which such transfers takes place. It also looks into the current use of remittance, the characteristics, and needs of remittance sending and remittance receiving persons.

Remittances are important for Bangladesh's economy and in 1998-99 contributed to 22% in financing imports. At present, these are transferred through official sources, hundis, friends and, relatives or are hand-carried. Remittances are employed in different ways. They may be:

• Main source of income for maintaining subsistence;
• Invested in purchasing homestead, commercial, or arable land;
• Used to finance the migration of another family member.

While substantial proportion of remittances flows through official channels, none of the MFIs are involved in the utilization of remittances. Even though they are aware that some of their credit money is used to finance the migration of members, the MFIs have not yet developed programs targeting migrant workers remittances. The author concludes that there is a substantial future scope for MFIs' involvement in providing remittance services. Some Bangladeshi MFIs are already contemplating targeting remittance-receiving families for savings.