Data Quality in the World Bank's Bilateral Remittance Report: Case Study of Bangladesh and India

The primary source of remittance data on the international stage is the reports published by KNOMAD. KNOMAD (Global Knowledge Partnership on Migration and Development) is a branch of the World Bank that engages in significant work on global knowledge partnerships related to migration and development. Additionally, for NGOs and research institutions worldwide that study these topics, KNOMAD serves as a key repository of information. It operates as an open, inclusive, and diverse knowledge partnership, incorporating experts to generate and synthesize knowledge for policymakers. KNOMAD regularly publishes data on the unilateral and bilateral remittance flows of almost all countries around the world. We have observed that there are substantial discrepancies in the bilateral remittance data for Bangladesh and India published by KNOMAD. These discrepancies may create confusion regarding the actual amount of remittances and can hinder accurate economic planning for both nations. Here, we intend to discuss the issue of data discrepancies in detail and attempt to seek some solutions for it.

1. Unusual Remittance Data in WB record:

There are two significant discrepancies in the bilateral remittance data between India and Bangladesh:

1. 1. The records of outbound remittances from India to Bangladesh show substantial differences between KNOMAD (World Bank) and Bangladesh Bank data.
   2. Outbound remittance data from Bangladesh to India has not been updated for several years.

According to the bilateral remittance data published by the World Bank, India was the largest source of remittances to Bangladesh in 2021, with a reported figure of approximately USD 5.747 billion. However, this data does not align with figures published by the Central Bank of Bangladesh (Reference 1). The Bangladesh Central Bank’s records show that India is not even among the top 30 remittance-originating countries. Notably, Finland, ranked 30th, sends only about USD 24 million annually to Bangladesh. This suggests that Bangladesh receives less than USD 24 million annually from India.

This discrepancy raises questions about the World Bank’s data, as it significantly overstates remittance flows from India to Bangladesh. While minor deviations between data sources are understandable due to various factors, the massive gap in this case indicates a potential error in the data source or methodology used by the World Bank.

The Central Bank of Bangladesh compiles monthly remittance data provided by local banks that have bilateral remittance arrangements with global financial institutions, including banks, money transfer operators (MTOs), and fintech companies, serving as payout correspondents. As such, the Central Bank’s data should accurately reflect the actual source of inbound remittance flows to Bangladesh.

There is also unusual data regarding outbound remittances from Bangladesh to India. According to the World Bank's statistics report, India received USD 126 million in remittances from Bangladesh in 2021. This figure has sparked debate, especially given the volume of Indian expatriates working in Bangladesh across various sectors and the extent of remittances sent through formal channels compared to informal channels. For example, a Wikipedia report indicates that India received USD 1 billion from Bangladesh in 2017, while a report by Transparency International Bangladesh (TIB) estimates that Indian expatriates sent approximately USD 3.1 billion from Bangladesh to India in 2020.

Furthermore, the World Bank's data for 2018 and 2022 reports identical figures for remittance flows from Bangladesh to India—USD 126 million. It is highly unlikely that the data for two different years would be identical, casting serious doubt on the accuracy and legitimacy of these figures. Adding to the confusion, no outbound remittance data has been published by the Bangladesh Bank.

KNOMAD, a World Bank agency, has recently removed its bilateral remittance report from its website. However, the data had already been widely cited by global research agencies and incorporated into their analyses, raising concerns about the reliability of conclusions drawn from potentially flawed data.

2. Fact checks:

Remittance flow is considered when an individual transfer money overseas to another person like family members, friends or to a self-bank account. It also includes some non-commercial cross border payments like tuition payment, personal investment, loan repayment, travel and medical related payments. From this perspective.

Considering the typical remittance flow patterns between India & Bangladesh, two neighboring countries, we conducted a detailed analysis of the remittance sources and performed fact-checks to validate the data:

Outbound remittance flow from Bangladesh to India:

Typically, there are two major purpose of remittance flow from Bangladesh to India

1. Expatriates’ remittance

According to an official announcement by the Bangladesh government, there are 5,876 Indians holding valid work visas in Bangladesh. This figure aligns closely with records from India’s Ministry of External Affairs, which states that approximately 9,000 Indians reside in Bangladesh, including students. However, these figures contrast sharply with media reports from both Bangladesh and India. An official statement from India's Minister of External Affairs, cited by Firstpost, claims that 19,000 Indians live in Bangladesh, including 9,000 students.

Adding to the confusion, a Wikipedia article citing a 2009 Financial Express survey claimed that up to 500,000 Indians were residing in Bangladesh. However, this figure appears exaggerated and lacks a credible source. Many of these individuals reportedly work in sectors such as NGOs, garment manufacturing, textiles, and IT, occupying technical roles that require specialized skills. Due to strict regulations on outbound remittances from Bangladesh, many of these expatriates rely on informal channels to send money back home.

2. Medical & Tourism

According to a report by Business Standard, an India-based newspaper, approximately 635,000 medical tourists visited India in 2023, based on Bureau of Immigration data. Of these, around 300,000–350,000 were from Bangladesh. Meanwhile, a Financial Express report claims that medical tourists travel to India from Bangladesh annually, spending about $500 million annually, as per India's Ministry of Tourism data. Indian Ministry also reported that Bangladesh led in Foreign Tourist Arrivals (FTAs) to India in 2023, with 175,754 visitors. Many payments for medical and tourism-related expenses are made in cash or through informal channels. These transactions often balance out against under-invoiced cross-border goods and services trade between the two countries.

Outbound remittance flow from India to Bangladesh:

Accurate data on the number and destinations of Bangladeshi diaspora members remains elusive. According to estimates by the Ministry of Expatriates' Welfare and Overseas Employment, approximately 7.5 million Bangladeshis live abroad, with nearly 60% in GCC countries, 650,000 in the UK, 300,000 in the USA, 800,000 in Malaysia and Singapore, and the rest spread across Europe and other regions. Typically, the largest remittance-originating countries are those with significant numbers of Bangladeshi expatriates.

Bangladesh Bank data identifies the top remittance-originating countries as UAE, Saudi Arabia, USA, Qatar, Malaysia, UK, and Kuwait. According to regulations, overseas financial institutions must comply with guidelines to provide remittance payout services in Bangladesh through local correspondent banks. Local banks, in turn, are required to submit monthly transaction data to Bangladesh Bank. Consequently, remittance data published by Bangladesh Bank is considered to accurately reflect actual inbound flows and aligns closely with World Bank reports—except for remittance flows from India to Bangladesh.

The World Bank’s bilateral remittance data is estimated using a methodology based on weighted migrant stock data, the weighted income of migrants relative to per capita income in their destination country, and the income level in their country of origin. According to data from the International Organization for Migration (IOM), 2.48 million Bangladeshi migrants are in India. This number has been a subject of historic and political debate at both sides. 

Setting aside this debate, calculating cross-border remittance flows solely based on migration stock is a flawed methodology, as it does not accurately represent actual remittance transactions. If such methods were valid, remittance flows from Bangladesh to Myanmar would appear significant, with around one million Rohingya refugees hypothetically sending an estimated USD 3.4 billion annually. However, this is unrealistic and underscores the limitations of estimating remittance flows using migration stock.

To provide a realistic view, remittance data from Central Banks—such as Bangladesh Bank and the Reserve Bank of India—should be considered the primary source for analyzing cross-border flows. World Bank data based on migration stock often produces vague estimates that fail to reflect the actual remittance flow from India to Bangladesh.

3. Cross border money movement Regulations of Central Bank:

Both Bangladesh and India have stringent reporting requirements for financial institutions regarding inbound and outbound remittance transactions. Financial institutions in both countries need to report all the inbound and outbound remittance transactions monthly to their respective department of the Central Bank. This is part of their regulatory framework to ensure compliance, transparency, and to prevent illicit activities like money laundering and terrorism financing. Hence, Central Bank at both Bangladesh (Bangladesh Bank) & India (Reserve Bank of India) keep consolidated record of all the inbound remittance flow via local licensed institutions.

4. Why accurate data is Important:

Cross-border remittance data is vital for a country because it provides valuable insights into economic trends, financial stability, and social welfare. Remittance flows contribute significantly to the national economy, especially in developing nations, where they often surpass foreign direct investment and aid. Accurate data helps policymakers understand the financial health of households reliant on remittances, allowing for better-informed decisions around fiscal policy and welfare programs. It also enables regulators to monitor and prevent illicit activities, such as money laundering or terrorist financing. By analyzing remittance data, governments can enhance financial inclusion, strengthen economic resilience, and foster global financial partnerships.

5. What should be done

Avoiding discrepancies in cross-border remittance data between Bangladesh and India requires coordinated efforts between the two countries to standardize reporting practices, enhance data sharing, and encourage the use of formal remittance channels. Here are several strategies that can help minimize data discrepancies:

1. 1. • 1. Cross-Border Reconciliation Committees: Forming a joint committee for cross-border financial reconciliation, with members from both central banks and relevant financial institutions, could help identify, investigate, and address data inconsistencies.
        2. Standardize Reporting Practices and Definitions: Both Bangladesh and India could establish common definitions and categories for remittances, such as family support, education, medical, and trade payments. Standardizing these classifications will make it easier to compare and reconcile data.
        3. Improving Transparency through Public Reporting. Bangladesh Bank should publish outbound data regularly and share with World Bank local team.
        4. Studying Informal Remittance Channels: Conducting joint research on the scale and drivers of informal remittances can help both countries understand where and why discrepancies arise and design effective interventions. Both countries could analyze trends in migration, cross-border employment, and seasonal remittance patterns to adjust reporting frameworks in line with real-world patterns.
        5. Developing Direct Banking and Payment Connectivity to enhance remittance efficiency: Establishing a bilateral banking partnership between India and Bangladesh could significantly enhance remittance efficiency, reduce transaction costs, and improve the tracking and reporting of cross-border remittances. Enable direct linkages between Indian and Bangladeshi banks, allowing for quicker, lower-cost remittance transactions. Consider integrating India’s UPI system with Bangladesh’s mobile banking platforms (such as bKash and Rocket) to enable instant, low-cost transfers. UPI integration could allow for seamless peer-to-peer (P2P) transfers, reducing the reliance on cash-based remittance flows.

1. 2. • 1. Become a member of World Bank “Working Group”:

World Bank has launched an International Working Group to Improve Data on Remittance Flows (the “Working Group”) under the auspices of KNOMAD (Global Knowledge Partnership on Migration and Development) and in coordination with top source and destination countries for remittances. Bangladesh is already a member of this group.

To sum up, the remittance flow dispute between Bangladesh and India underscores the need for improved data-sharing practices and regulatory cooperation. Accurate remittance data would benefit both countries, helping them to make informed economic decisions and support the financial well-being of migrant communities. By addressing the root causes of data discrepancies, Bangladesh and India can foster more robust economic ties and enhance mutual trust in their cross-border financial activities.