Bangladesh Bank cracks down on bonuses amid soaring loan defaults
Bangladesh Bank has tightened rules on incentive bonuses for banks amid rising financial strain. The central bank’s latest directive bars loss-making institutions from awarding bonuses, citing worsening loan defaults and regulatory gaps. By September 2025, non-performing loans had nearly doubled in less than a year. The new restrictions apply to all banks, including state-owned ones, under the 2025 incentive-bonus guideline. To qualify for bonuses, banks must now prove genuine net profit—calculated strictly from real income and expenses. Loans with extended repayment terms or relaxed conditions cannot be counted toward profit for bonus purposes. The central bank’s directive links bonuses directly to financial health and real profitability. Banks must now address capital shortfalls, provision gaps, and rising defaults before considering employee incentives. The rules aim to curb unsustainable practices while pushing institutions toward stricter compliance.
