Banks can now pay incentive bonuses on operating profit: Cenbank

Commercial banks will now be allowed to pay incentive
bonuses to employees even if they do not post a net profit, provided they
record an operating profit, according to a new circular issued by the
Bangladesh Bank that rolls back earlier restrictions.
The
circular issued yesterday ( 28 April) and sent to the managing directors and
chief executives of all banks, also states that banks may pay incentive bonuses
even if they face a capital shortfall.
However,
only institutions whose capital positions have not declined compared with the
previous year will be eligible to offer such bonuses.
Banks that do not require deferral facilities will also
fall within the scope of the new provision, it added.
According
to the circular, a bank's board of directors may approve an incentive bonus of
up to one month's basic salary, taking into account any special achievements of
the bank during the year.
The
decision aims to boost motivation among officers and employees and maintain a
competitive environment across the banking sector, the central bank said,
adding that all other instructions outlined in the circular issued in December
last year will remain unchanged.
In
December 2025, Bangladesh Bank had stated that banks failing to make a net
profit would not be allowed to pay incentive bonuses. The earlier directive
also barred banks with capital and provisioning shortfalls from offering such
payments.
Bankers said many institutions had traditionally paid performance bonuses
immediately after the end of the financial year, while others reported profits
using various relaxations and distributed bonuses accordingly.
The
December directive effectively halted such payouts, leaving only employees of
well-performing banks likely to receive incentives.
Earlier
this month, the Association of Bankers, Bangladesh (ABB) urged the central bank
governor to reconsider the restrictions, particularly those preventing banks
with capital and provisioning shortfalls from paying bonuses.
The
central bank move follows that request.
A
managing director who attended the meeting said the earlier rules had made it
harder for banks to retain skilled staff.
"Because
of these kinds of rules, it has become difficult to retain many good employees
in banks," he said. "If there is no incentive bonus, efficient
employees will not stay in these banks. That is why ABB demanded that the
central bank step back from this decision."
















