Employees won't get incentive bonuses: BB

FE REPORT

Bangladesh Bank on Tuesday directed that commercial banks having capital shortfall or provision shortfall would not be able to pay incentives to their employees.

Banks previously used to disburse such type of bonuses even if they had deficits.

The central bank issued this directive in order to ensure good governance in the banking sector and strengthen efficiency.

The central bank issued the circular on the day to the managing directors and chief executives of all banks.

According to the circular, incentive bonuses can only be paid from profits earned based on the current year's actual income and expenses.

“Bonuses cannot be paid from retained earnings.”

A senior Bangladesh Bank official told the FE that incentive bonuses should have been paid from the banks' current year's income and expenses, not from retained earnings.

"Banks with capital shortfalls cannot pay bonuses.”

Banks using deferral facilities or those with classified or written-off loans are also barred from issuing such incentives.