Bangladesh Bank eases rules to allow staff bonuses at profit-making commercial banks

Banks with operating profit may now pay staff up to one month’s basic salary for “special achievements”, even if they do not post year-end net profit

Bangladesh Bank has relaxed its restrictions on incentive bonuses, allowing commercial banks to reward employees for special achievements even when they fail to report net profit at the end of the year.

In a notification issued on Tuesday, the central bank said banks that record operating profit may pay officials and employees an incentive bonus of up to one month’s basic salary, provided they meet specific conditions.

The move is likely to benefit employees of several state-owned banks, including Sonali, Janata, Agrani, BASIC and Rupali, some of which generate operating profit but do not show net profit after provisioning and other adjustments.

Bangladesh Bank said the relaxation was intended to improve staff motivation and preserve a competitive working environment in the banking sector.

Under the revised rules, a bank’s board may consider incentive bonuses if the institution records operating profit, maintains regulatory capital at least at the previous year’s level, and does not seek deferred provisioning benefits during the relevant year.

The new instruction partially reverses a stricter directive issued in December, when the central bank barred banks from paying incentive bonuses unless they posted year-end net profit. That order also tightened conditions linked to capital adequacy and provisioning.

The December rules effectively stopped bonus payments at many private and state-owned banks, creating discontent among employees, particularly in state-run institutions. The issue was later taken up with the finance ministry.

At the time, Bangladesh Bank had argued that paying bonuses from accrued or unrealised income was inconsistent with financial discipline and prudent banking practice.

The revised notification allows boards to consider bonuses where there is measurable progress in key indicators, including recovery of classified and written-off loans.

State-owned commercial and specialised banks, however, will still have to comply with the 2025 incentive bonus guidelines applicable to them and to state-owned financial institutions.