What are remittances?
Remittances are the money people living or working abroad send home. A construction worker in Saudi Arabia, a factory worker in Malaysia, a restaurant owner in the UK or an office worker in the US: each sends part of their income to parents, spouse and children or siblings. The money arrives in foreign currency and is converted into taka at home.
For families it pays for household costs, children’s schooling, healthcare, building a house or buying land. For the country it is a supply of dollars used to pay for imports and repay foreign loans. So remittances are both household income and national foreign earnings at the same time.
Say Kamal from Cumilla works in Dubai and sends money home every month through formal banking channels. His dollars enter a bank at home and are converted into taka, and his mother spends that taka on rice, oil and medicine at the village shop. The dollars stay in the country’s banking system, where perhaps an importer uses them to bring in fuel. One transfer serves both a family and the whole country.
Why it matters to an investor
- An effect on the taka and reserves: more remittances mean more dollars, stronger reserves and less pressure on the taka. That in turn affects inflation and interest rates.
- An effect on spending and business: much spending in rural areas relies on remittances. So businesses in everyday goods, building materials or banking also move with remittance flows.
- Planning for migrant families: where regular remittances go, and how much is spent versus saved, shapes the family’s long-term security. There are also government bonds designed for people abroad.
- Understanding the risk: remittances depend on job markets abroad, oil prices and those countries’ rules. A family whose income rests on one source carries a kind of concentration risk.
How big remittances are in Bangladesh
According to Prothom Alo, citing Bangladesh Bank data, remittances were about 30.33 billion dollars in FY2024-25 and a record of about 35.56 billion dollars in FY2025-26, roughly 17% more in one year. For comparison, goods exports that year were about 48 billion dollars.
Relative to the size of the economy, World Bank figures put remittances at roughly 4.6% to 6.1% of GDP from 2016 to 2024, and about 7.4% in 2025. These figures change every year; Bangladesh Bank publishes the latest monthly numbers.
Where it comes from
According to the Dhaka Tribune, the largest remittance sources in FY2025-26 were Saudi Arabia, the United Kingdom, the United Arab Emirates, Malaysia and the United States. Together these five made up about 62% of the total. The order changes from year to year.
- Remittances from the Middle East depend a good deal on oil prices and demand in construction and services there.
Why formal channels matter
- Dollars sent through banks or authorised providers add to the country’s reserves. Through illegal routes such as hundi, the family gets the taka but the dollars never reach the country.
- Hundi is illegal and carries a risk of fraud, with nowhere to complain if the money goes missing.
- The government has been paying a cash incentive to encourage sending through formal channels. The rate and conditions are set by the government and can change over time.
Worked example
- Say Kamal sends 500 dollars a month. At Tk 110 to the dollar the family gets Tk 55,000, or Tk 6,60,000 a year.
- At Tk 122 the same 500 dollars bring Tk 61,000, or Tk 7,32,000 a year: Tk 72,000 more in taka.
- But when the taka weakens, prices usually rise too. Say the family’s costs rose 10% over the same period: what cost Tk 6,60,000 now costs Tk 7,26,000.
Result: the taka amount rose by about 11%, but buying power rose only a little. Rather than treat the exchange-rate gain as extra income, it should be measured after inflation. The numbers are only an example.
Common mistakes
- Sending money through illegal routes such as hundi for a better rate. It is unlawful, risky and adds nothing to the country’s reserves.
- Spending every month’s remittance in full, assuming the income abroad will always continue. A change in job, visa or health can stop it suddenly.
- Putting remittance money into something on a relative’s or acquaintance’s word without understanding it. Overseeing it from afar is hard, so the risk is higher.
- Thinking “our income has gone up” from the taka amount alone, without taking inflation out.
Remittances are both family income and a major source of the country’s dollars; only money sent through formal channels adds to reserves, and at home, measure exchange-rate gains after inflation.