Performance is rated on a 100-point scale, says the new government order
Highlights:
- Employees at state-run banks may earn up to three bonuses annually based on performance.
- Bonuses will now be connected to net profits instead of operating profits.
- This change aims to curtail random bonus distributions.
- Sonali Bank breached the rules by issuing five bonuses in 2023.
- Staff scoring fewer than 40 points won’t be eligible for bonuses.
- Bonus payments need endorsements from the board of directors and the respective ministries.
Employees of state-owned commercial banks and specialized financial institutions will receive bonuses strictly based on performance criteria, with a maximum of three bonuses each year.
A recent directive from the Department of Finance’s Financial Institutions Division establishes that bonuses will hinge on net profits, breaking from previous methods that considered operating profits. Officials noted this shift intends to halt the arbitrary allocation of bonuses that has become routine.
Reportedly, many banks have flouted established policies in recent times. For instance, Sonali Bank gave out five incentive bonuses in 2023, contravening the three-bonus limit. Afterward, the ministry instructed that two bonuses be reclaimed, but sources indicated that the funds were never returned. Other banks seem to have also exceeded their bonus distributions.
The new guidelines stipulate that six state-owned banks—Sonali, Agrani, Janata, Rupali, Basic, and BDBL—will award bonuses based on five performance metrics: net profit ratio of working capital, deposit growth, loan growth, the recovery rate of defaulted loans, and the performance of written-off loans.
Professional banks like Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank will follow a similar structure, albeit with some adjustments tailored to their operational focus. For example, the Bangladeshi Investment Corporation has different metrics intertwined with dividends and capital market performance.
For the House Building Finance Corporation, criteria emphasize working capital and actual loan returns alongside net profit from loan growth.
Bonus Scale
Performance will be assessed on a 100-point scale. Employees who score below 40 points are ineligible for bonuses. Those scoring between 40-50 will receive a bonus equivalent to one month of their base salary, while scores of 50-60 earn 1.5 months, and 60-70 two months, with scores above 80 qualifying for up to three months of salary. The calculation will reference the base salary from the last month of the fiscal year.
Approval Process
Per the new guidelines, commercial banks will distribute bonuses only after board approval, while specialized banks must secure both board and financial institution division approval. If an institution fails to meet the performance standards, they may offer Gratia payments equivalent to a single month’s base salary.
