No incentive bonus if defaulted loans are not recovered

From now on, to get incentive bonuses, employees of state-owned banks and financial institutions will have to show recovery from defaulted and written-off loans. In addition, the total loans and advances and deposits distributed will have to increase. Keeping this provision in mind, the Financial Institutions Department of the Ministry of Finance has issued guidelines on giving incentive bonuses. However, a maximum of three bonuses can be given in a year. The basis for giving bonuses will no longer be operating profit. It will be net profit. Officials of the Financial Institutions Department said that after this directive, state-owned commercial and specialized banks and financial institutions will no longer be able to give incentive bonuses to employees indiscriminately.

The guidelines state that net profit should be calculated by adjusting the provisions on loans and advances, provisions for depreciation and appreciation of investment value and provisions for depreciation and appreciation of other assets from the bank's operating profit. There was a lack of discipline in giving incentive bonuses in banks until now. To eliminate this, this uniform incentive bonus guideline has been issued after discussions with the banks.

Sources said that until now there was a policy in this regard, which was being violated by some big banks. For example, Sonali Bank gave five incentive bonuses in 2023, even though there was no opportunity to get more than three incentive bonuses. Similarly, other banks have also given more bonuses.

The directive also states that the state-owned commercial banks Sonali, Agrani, Janata, Rupali, Basic and BDBL will give incentive bonuses based on five components or performance indicators. These are the net profit rate on working capital, the rate of growth in deposits, the rate of growth in loans and advances, the rate of recovery of defaulted loans and the rate of recovery of written-off loans. The bonuses of the specialized Bangladesh Krishi Bank (BKB), Rajshahi Krishi Unnayan Bank (RKAB), Karmasangsthan Bank, Palli Sanchay Bank, Probashi Kalyan Bank and Ansar-VDP Unnayan Bank will be determined in the same manner.

In addition, in the case of the financial institution Investment Corporation of Bangladesh (ICB), although five indicators are also considered, there are some changes. In this case, the net profit rate on working capital, the rate of dividend and capital gain on investment, the rate of recovery of defaulted loans, the rate of growth of the company's transactions in the capital market and the rate of recovery of written-off loans will be taken into consideration. And in the case of Bangladesh House Building Finance Corporation (BHBFC), the net profit rate on working capital, the annual actual recovery rate of recoverable loans and the rate of growth of loans and investments will be taken into consideration.

Based on this evaluation, no bonus can be given if the score is less than 40 out of 100. In the case of 40 to 50 marks, one bonus can be given, in the case of 50 to 60 marks, one and a half, in the case of 60 to 70 marks, two bonuses can be given, in the case of 70 to 80 marks, two and a half, and in the case of 80 marks or more, three bonuses can be given. One bonus means an amount equivalent to one month's basic salary. An amount equivalent to the basic salary due in the last month of the accounting year will be considered as the basis for the incentive bonus.

In light of this guideline, state-owned commercial banks will provide incentive bonuses with the approval of their respective boards of directors. State-owned specialized banks and financial institutions will provide incentive bonuses with the approval of the Financial Institutions Department based on the recommendations of their respective boards of directors in light of this guideline.

If an incentive bonus is not available in any year as per the conditions mentioned in the guideline, the Financial Institutions Department may consider providing an amount equivalent to one month's basic salary as ex-gratia if the institution applies based on the recommendation of the board of directors of the concerned institution considering any special achievements in the year in question.