BB relaxes bonus rules to help banks retain skilled staff

Bangladesh Bank has eased restrictions on incentive bonuses for banking sector employees, allowing scheduled banks to reward staff with up to one month’s basic salary even when certain performance targets are not fully met.

The central bank’s Banking Regulations and Policy Department issued the new directive on Tuesday and circulated it to the managing directors and chief executive officers of all scheduled banks. The move is intended to lift employee morale and foster a more competitive working environment across the industry.

The fresh instruction relaxes specific conditions set out in a previous circular dated 9 December 2025. Under that earlier framework, banks that fell short of strict criteria were largely barred from paying incentive bonuses. 

The new circular allows a bank’s board of directors to approve bonuses of up to one month’s basic salary even if the institution does not qualify for such payouts under the December guidelines.

To take advantage of this relaxed provision, banks must have recorded an operating profit in the relevant year. They must also maintain regulatory capital at a level no lower than the previous year, excluding any reduction that stems from a deferred provision previously approved by the central bank. 

Additionally, banks are not permitted to have applied for any new provision deferral facilities from Bangladesh Bank during the period in question.

All other terms and conditions of the December 2025 circular remain in force, the central bank confirmed.

The policy shift follows a recent appeal from the Association of Bankers, Bangladesh, which had asked the central bank governor to reconsider the earlier restrictions. Banking executives had warned that the tight bonus rules were making it increasingly difficult to retain talented professionals, as high-performing employees would be less inclined to stay without meaningful incentive payments.

A managing director familiar with the discussions said the association urged the central bank to step back from the rigid policy, arguing that the industry was at risk of losing skilled manpower to more attractive opportunities. 

Bangladesh Bank subsequently revised its stance, offering banks greater flexibility to reward their workforce while maintaining core financial safeguards.