The implementation of separate incentive bonus policies for state-owned and private banks has reignited a long-standing debate over regulatory equity within Bangladesh’s financial system. While authorities insist that differentiated rules are necessary due to structural differences between the two sectors, private bank employees increasingly view the policy split as discriminatory and demoralising.
Incentive bonuses have long been embedded in the banking sector as a reward for performance and a tool for retaining skilled professionals. Typically equivalent to one month’s basic salary, such bonuses have been awarded multiple times a year, sometimes reaching as many as seven instalments. However, public outrage over exceptionally large payouts in the past prompted regulators to introduce tighter controls.
The latest policy framework, however, goes beyond moderation and introduces a clear divide. State-owned banks, governed by the Ministry of Finance’s Financial Institutions Division, are permitted to offer incentive bonuses even when operating at a loss, subject to approval. This provision acknowledges the public sector’s structural challenges but simultaneously shields employees from the direct consequences of financial underperformance.
Private banks, regulated by Bangladesh Bank, face a starkly different reality. They must achieve net profit without reliance on accounting concessions, maintain full capital and reserve compliance, and show tangible improvements in loan recovery. Any deviation from these criteria results in automatic disqualification from paying bonuses.
Private sector bankers argue that the policy fails to recognise their role in sustaining the financial system. Despite facing stricter supervision and higher market risks, private banks have consistently driven financial inclusion, innovation, and service quality. Denying incentive bonuses, they argue, sends the wrong signal to employees who deliver results under challenging conditions.
Anonymous bank officials have pointed out the contradiction in allowing state-owned banks with persistent capital deficits to reward staff, while private banks with temporary shortfalls but stronger governance structures are penalised. They warn that such inconsistencies could distort competition and erode confidence in regulatory neutrality.
Experts also highlight the psychological impact of the policy. Incentive bonuses are not merely financial rewards; they symbolise recognition and trust. Removing them, particularly when employees have met performance targets, risks disengagement and reduced productivity.
Industry observers predict that under the new rules, only a small number of private banks will qualify for incentive bonuses. As a result, a practice that once defined performance culture in the sector may soon become the exception rather than the norm.
As the debate continues, many within the banking community are calling for a harmonised policy framework—one that enforces discipline without creating structural inequities. Whether regulators will revisit the issue remains uncertain, but the implications for morale, competitiveness, and long-term sector health are already becoming apparent.