The central bank of Bangladesh has implemented stringent rules governing the payment of incentive bonuses for bank officers and employees. The latest directive stipulates that staff members will no longer qualify for bonuses if there is insufficient progress in the recovery of non-performing loans. This move aims to enforce greater financial discipline and accountability in bonus distribution across the banking sector.
Issued on Tuesday (9 December) under the authority of the Companies Act, the directive has been formally communicated to the managing directors and chief executives of all scheduled banks in the country. The guidelines clearly specify the rules and conditions that must be adhered to for the lawful distribution of incentive bonuses.
According to the central bank, bonuses may only be awarded based on the profit realised from actual income and expenditure in the relevant financial year. Bonuses cannot under any circumstances be paid from accumulated profits. Additionally, banks must maintain their regulatory capital without any shortfall, and any deficiency in provisions or reserves is deemed unacceptable. If any deferral facility has been granted by a bank, this cannot be considered in profit calculations. The directive also emphasises that improvements in key banking indicators and sufficient progress in recovering classified or written-off loans will be critical factors in the approval of bonuses.
For state-owned banks, a separate and mandatory guideline must be followed. These institutions are required to comply with the “Guidelines for Payment of Incentive Bonuses to Employees of State-Owned Commercial Banks, Scheduled Specialised Banks, Non-Scheduled Specialised Banks and Financial Institutions-2025.” Under this framework, every stage of the bonus approval and disbursement process must be carefully reviewed, authorised, and implemented in line with the rules.
Analysts note that the new regulations are expected to strengthen financial discipline throughout the banking sector. The central bank anticipates that strict adherence to these conditions will ensure that banks concentrate more effectively on recovering non-performing loans, while also enhancing transparency and governance. Simultaneously, banks that fail to achieve genuine profits will be restricted from distributing bonuses arbitrarily, which is expected to contribute significantly to sectoral stability.
The introduction of these measures is projected to reinforce accountability among bank employees and encourage prudent financial management. By linking bonuses directly to actual performance and regulatory compliance, the initiative aims to safeguard the long-term health of the banking sector and maintain public trust and confidence in financial institutions.
This directive represents a decisive step by the central bank to tighten oversight, promote responsible banking practices, and ensure that incentives are aligned with genuine operational and financial performance.