BB bars banks with capital shortfalls from paying bonuses

Bangladesh Bank (BB) has directed that commercial banks with capital or provision shortfalls are prohibited from paying incentive or performance bonuses to their employees.

The central bank issued a circular to the managing directors and chief executives of all banks today, outlining the new rules. Previously, banks could distribute such bonuses even if they had deficits.

Under the new guidelines, incentive bonuses can only be paid from profits earned in the current year based on actual income and expenses. Payments from retained earnings are not allowed.