Regulatory Alerts2025-12-09
Added
BRPD Circular No. 12: Incentive bonuses for the employees of bank-companies
The circular prohibits scheduled banks from paying incentive bonuses based on capitalized profits or when regulatory capital buffers are insufficient, restricting payouts to years with net profit derived solely from actual income and expenses. It requires banks to consider improvements in banking indicators and the recovery of classified/write-off loans when determining bonus eligibility. The directive is issued under Section 45 of the Bank Companies Act, 1991, while state-owned and specialized banks must follow the separate 2025 incentive bonus guidelines.
Bangladesh Bank Chief Executive Office Motijheel, Dhaka-1000 Bangladesh. Ref No.: BRPD-Regulatory Policy Banking Regulation and Policy Department BRPD Circular No. 12 Date: 24 Agrahayan 1432 09 December 2025
Managing Director/Chief Executive Officer All Scheduled Banks operating in Bangladesh
Dear Sir,
Subject: Regarding the provision of incentive bonuses for the employees of bank-companies.
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In light of the current situation in the banking sector and the performance of financial capabilities, it is not consistent with sound financial governance and efficient banking management to provide incentives or bonuses based on unrealized or hypothetical profits.
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Accordingly, instructions are hereby issued to scheduled banks to ensure the following conditions before providing incentive bonuses (Incentive Bonus) to their employees:
(a) Incentive bonuses shall be paid only in financial years where net profit is determined solely on the basis of actual income and expenses;
(b) No incentive bonus shall be provided from capitalized profits;
(c) There shall be no shortfall in regulatory capital or any shortfall in any reserve; and in this regard, any extension facility provided shall not be considered in the determination of profit;
(d) Improvements in various banking indicators and progress in the recovery of classified/write-off loans shall be considered in the provision of this bonus.
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Regarding the State Bank, the "Guidelines on Provision of Incentive Bonus (Incentive Bonus) to Employees Working in State-Owned Commercial Banks, Scheduled Specialized Banks, Non-Scheduled Specialized Banks, and Financial Institutions, 2025" shall be followed.
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This instruction is issued under the powers conferred by Section 45 of the Bank Companies Act, 1991.
Yours faithfully,
Md. Alauddin Director (BRPD) Phone: 9530095