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Case Study: Remittances


At FMFB Tajikistan, remittance services are now available at 29 banking service centres throughout the country, reflecting the importance of remittances in the Tajik economy.At FMFB Tajikistan, remittance services are now available at 29 banking service centres throughout the country, reflecting the importance of remittances in the Tajik economy.Tajikistan has one of the lowest gross domestic products per capita among the 15 former Soviet Republics and nearly two-thirds of the population continues to live in poverty. In recent years, the economy has become heavily reliant on migrant remittances. More than 43 percent of Tajikistan’s GDP is made up by remittances.

The average Tajik migrant is a 32-year old, male, who has three dependents, spending 14 months at a time (cyclically) in Russia and remitting US$ 2,000-2,500 on average per year (US$ 150-200 per month). Remittances are generally seasonal and peak between September and December each year, around the time migrants return home after the completion of a contract. Recipients of remittances are most often women who remain to care for the family.

Over the last year, FMFB-T has worked on increasing the number of access points for banking operations so that many communities can access remittances close to their homes. In 2009, the National Bank of Tajikistan granted FMFB-T the right to engage in money transfer activities in its banking service centres because remittance recipients are more inclined to receive remittances through banks or operators that have locations close to where they reside.

The bank is also advertising its remittance services so that it can begin to build a visible presence in Tajikistan. In Russia, FMFB-T has established a greater presence to attract remittance business and promote the services of the bank.

Establishing a stronger presence in Russia enables the bank to engage more with the migrant communities, building relationships which can be further strengthened by remittance officers in Tajikistan.

FMFB-T has started to develop several remittance-linked products to help its clients increase the amount of the remittances that go into asset building as opposed to income smoothing. In 2010, FMFB-T started considering a remittance-linked savings product to foster the building of assets of its clients.

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