Banks can now pay incentive bonuses on operating profit: Cenbank
Only institutions whose capital positions have not declined compared with the previous year will be eligible to offer such bonuses
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.
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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."
