Bangladesh Bank Ties CEO Pay and Jobs to New KPI Scorecard as Bad Loans Hit Record 32.78 Percent

A New Scorecard for Bank Bosses

Bangladesh Bank has introduced a uniform Key Performance Indicator framework for the managing directors and chief executives of every scheduled bank in the country, formally instructing all bank chairmen to comply with a bi-annual evaluation regime that will grade bank leaders on roughly 30 separate indicators starting October 1. Central bank officials have been blunt about the stakes: underperforming MDs and CEOs may ultimately face removal, and the results will feed directly into decisions on remuneration, incentives, reappointment, tenure extensions and succession planning.

The move is Bangladesh Bank's most systematic attempt yet to hold individual bank leadership personally accountable for the health of the institutions they run, rather than treating governance failures as problems to be managed after the fact through bailouts, rescheduling windows and regulatory forbearance.

How the Score Is Built

The framework grades each MD or CEO across five weighted categories. Bank solvency and liquidity accounts for 25 percent of the score, asset quality another 25 percent, and governance and internal control a further 25 percent, meaning three quarters of a leader's entire evaluation rests on the fundamentals of running a safe, well-capitalised institution. The remaining quarter splits between inclusion, customer and market conduct at 15 percent and profitability at just 10 percent, a weighting that explicitly signals the central bank cares more about a bank being sound and fair to customers than about how much money it makes.

Category	Weight
Bank solvency and liquidity	25%
Asset quality	25%
Governance and internal control	25%
Inclusion, customer and market conduct	15%
Profitability	10%

Scores translate into three bands: 75 or above is rated Above Average, 65 to just under 75 is Average, and anything below 65 falls into Below Average. Crucially, a CEO only earns credit for an individual indicator at all if the bank achieves at least 50 percent of the predetermined target for it, a floor designed to stop leaders from padding their overall score with strong performance in easy categories while quietly neglecting harder ones.

The Six Areas That Can Sink a Score

Beyond the headline weightings, the framework singles out six specific metrics as critical performance areas: the advance to deposit ratio, both gross and net non-performing loan ratios, large loan and top borrower concentration, recovery rates on classified and written off loans, and outreach in CMSME lending, agriculture, green finance and financial inclusion more broadly. Falling below 50 percent of target in any of these six areas triggers an automatic 25 percent penalty deduction from the leader's overall weighted score, regardless of how well the bank performs elsewhere. That structure effectively creates a set of non-negotiable minimums sitting underneath the broader five-category scoring system, aimed squarely at the specific failure modes that have driven Bangladesh's banking crisis in recent years: loan concentration among a small number of large borrowers, weak recovery of bad debt, and neglect of smaller, harder to service borrowers in favour of easier corporate lending.

From Reviews to Removal

The first formal assessment period runs from October 1, 2026 through March 31, 2027, with evaluations repeating every six months after that on a rolling basis. Banks must submit their board-approved KPI frameworks to Bangladesh Bank within seven working days of approval, and performance reviews are due within 15 days of each assessment period's close, a compressed timeline that leaves little room for banks to slow-walk their reporting obligations. Bangladesh Bank has stated plainly that KPI outcomes will directly influence a leader's remuneration and incentive package as well as decisions on whether to reappoint them, extend their tenure, or begin planning their succession, effectively tying a bank CEO's career and pay packet to a scorecard the central bank itself now controls.

Why Now: The Backdrop of a Record Bad Loan Ratio

The timing is not incidental. This publication reported earlier this month that Bangladesh's non-performing loan ratio climbed to 32.78 percent in June, the worst on record, with just ten banks responsible for more than 72 percent of a bad debt pile now standing at Tk6,06,555 crore, and several lenders carrying default ratios above 90 percent. Days later, this publication also detailed a Tk4 crore bribery scandal at Bangladesh Commerce Bank, in which regulators found bank officials had funneled money into personal accounts disguised as hospitality expenses and deposit incentives, with 13 officials facing disciplinary action and two senior figures facing outright dismissal. Bankers and economists quoted in that reporting pointed to exactly the kind of unchecked internal and political patronage the new KPI framework appears designed to counter, patronage that regulators have increasingly identified as a root cause of the sector's deteriorating asset quality rather than a series of isolated incidents.

Seen against that backdrop, the KPI framework reads less like a routine administrative update and more like an attempt to close the gap between individual accountability and institutional outcomes that has persisted through years of worsening bank health. Bangladesh Bank has tried other levers this year, including a longer rescheduling window for the largest defaulters and a new network of 131 valuation firms to check inflated loan collateral, but both of those measures target the mechanics of bad lending after it happens. The KPI scorecard, by contrast, is aimed at the individuals who approve the lending in the first place, and at making sure their own compensation and career prospects are directly exposed to the consequences of the loans their institutions make.

Will Scorecards Actually Change Behaviour?

Whether a KPI framework can meaningfully change outcomes in a banking sector where non-performing loans have climbed for consecutive years despite repeated regulatory intervention is an open question. Skeptics within the industry are likely to note that similar performance-linked accountability measures have existed in other forms before, and that boards heavily influenced by the same politically connected shareholders blamed for past patronage problems will ultimately decide how strictly the framework gets applied to any individual CEO. The KPI system's real test will not be its design, which is detailed and reasonably comprehensive on paper, but whether Bangladesh Bank is willing to follow through on removing or penalising well-connected bank leaders whose institutions score poorly, something the central bank has historically found politically difficult to do even when the underlying numbers left little room for doubt.