Written by The Banking Post
Commercial banks in Bangladesh will now be allowed to pay incentive bonuses to employees even if they do not post a net profit, provided they earn an operating profit, under a fresh directive from Bangladesh Bank.
The new circular, issued on April 28 to managing directors and chief executives of all banks, relaxes restrictions imposed in December last year.
Under the revised policy, banks may also pay bonuses even if they have a capital shortfall, as long as their capital position has not worsened compared with the previous year. Institutions that do not require deferral facilities will also qualify.
According to the circular, a bank’s board of directors can approve an incentive bonus of up to one month’s basic salary after considering any notable achievements during the year.
The central bank said the decision was taken to improve employee motivation and maintain competitiveness across the banking sector. All other provisions of the earlier December circular will remain unchanged.
In December 2025, Bangladesh Bank had barred banks without net profit from paying incentive bonuses. It also prohibited lenders with capital and provisioning shortfalls from offering such payments.
Bankers said the earlier restrictions disrupted a long-standing practice where many institutions paid performance bonuses after the financial year-end. Some banks had also used regulatory relaxations to report profits and distribute incentives.
The move came after the Association of Bankers, Bangladesh (ABB) urged the central bank earlier this month to reconsider the restrictions, especially for banks facing capital and provisioning gaps.
A bank managing director who attended discussions said the previous rules had made it harder to retain skilled employees.
“If there is no incentive bonus, efficient employees will not stay in these banks,” he said. “That is why ABB asked the central bank to review the decision.”
