Central Bank Eases Bank Bonus Rules

Commercial banks in Bangladesh will now be allowed to provide incentive bonuses to employees even if they fail to record a net profit, provided they generate an operating profit. The new policy marks a relaxation of earlier restrictions imposed by the central bank and is expected to provide greater flexibility to banks in rewarding staff performance.

In a circular issued on Tuesday, 28 April, Bangladesh Bank informed managing directors and chief executive officers of all scheduled banks about the revised bonus guidelines. Under the updated rules, banks with capital shortfalls may still disburse employee incentive bonuses, but only if their capital position has not deteriorated compared with the previous year.

The circular also states that banks which do not require deferment facilities will be eligible under the new provisions. Bank boards of directors have been authorised to approve incentive bonuses of up to one month’s basic salary for employees.

According to the central bank, the decision is intended to strengthen employee motivation and preserve a competitive working environment in the banking sector. Officials believe that allowing limited bonuses, even during financially challenging periods, could help banks retain skilled personnel and maintain operational morale.

However, all other instructions contained in the earlier circular issued in December 2025 will remain unchanged.

Previous Restrictions

In December 2025, Bangladesh Bank had adopted a stricter position regarding staff bonuses. It announced that banks failing to post a net profit would not be allowed to grant incentive bonuses. Additionally, banks suffering from capital deficiencies or provision shortfalls were prohibited from making such payments.

The move was part of broader efforts to strengthen financial discipline in the banking sector, which has faced mounting pressure from rising non-performing loans, liquidity concerns, and tighter regulatory oversight.

Bankers noted that in previous years many banks typically distributed incentive bonuses shortly after the end of the financial year. Some institutions reportedly used regulatory concessions and accounting adjustments to reflect profits and subsequently reward employees.

The December restrictions brought this practice to a halt, creating an uneven situation where only employees of relatively stronger banks continued to receive bonuses, while staff at weaker institutions were excluded regardless of operational performance.

Industry Demand for Relaxation

Earlier this month, the Association of Bankers, Bangladesh (ABB) formally requested the governor of Bangladesh Bank to reconsider the restrictions. The organisation argued that employees should not be deprived of bonuses solely because of capital or provision shortfalls, particularly when banks remain operationally profitable.

The latest decision appears to be a direct response to that request.

The revised policy reflects a balancing act by the central bank between maintaining prudential discipline and addressing employee concerns in a sector facing persistent financial and operational pressures.