Central Bank Issues New Strict Guidelines for Bank Bonuses

The central bank of Bangladesh has imposed stringent conditions on the payment of incentive bonuses for bank officers and employees. According to the latest directive, staff members will no longer be eligible for such bonuses if there is insufficient progress in the recovery of non-performing loans. This measure has been introduced to ensure greater discipline and accountability in the disbursement of bonuses within the banking sector.

The directive was issued on Tuesday (9 December) under the authority of the Companies Act. It has been formally communicated to the managing directors and chief executives of all scheduled banks in the country. The guidelines clearly outline the criteria and rules that must be followed for the distribution of incentive bonuses.

The central bank specifies that bonuses may only be granted based on the profit realised from actual income and expenditure in the relevant financial year. Bonuses cannot be paid from accumulated profits under any circumstances. Furthermore, there must be no shortfall in regulatory capital maintenance, and any deficiencies in provisions or reserves are considered unacceptable. If a bank has granted any deferral facilities, these cannot be factored into profit calculations. In addition, the improvement of various banking indicators and adequate progress in the recovery of classified or written-off loans will be key considerations in awarding bonuses.

For state-owned banks, there is a separate, mandatory guideline. These institutions must follow 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.” The directive requires that every stage of the bonus approval and disbursement process be carefully reviewed, authorised, and implemented in accordance with these rules.

Analysts suggest that the new regulations, once implemented, will strengthen financial discipline across the banking sector. The central bank anticipates that adherence to these conditions will encourage banks to focus more diligently on recovering non-performing loans while enhancing overall transparency and governance. At the same time, banks that fail to achieve genuine profits will be prevented from distributing bonuses arbitrarily, which will play an essential role in maintaining sector stability.

The introduction of these guidelines is expected to reinforce accountability among bank employees and promote prudent financial management. By ensuring that bonuses are tied strictly to actual performance and regulatory compliance, the measure aims to support the long-term health of the banking sector and sustain public confidence in financial institutions.