Bangladesh Bank has introduced a 100-point performance scorecard for the appointment and reappointment of managing directors and CEOs of commercial banks, linking their pay, incentives and tenure to measurable targets.
Under the new framework, bank boards will assess CEOs across five areas: capital and liquidity management, asset quality, profitability, governance and internal controls, and customer service, financial inclusion and market management.
The central bank issued the policy, titled “Key Performance Indicators (KPIs) Framework for Managing Director/Chief Executive Officer (CEO) of Banks,” on Sunday.
Bank boards will have to set specific performance targets when appointing or reappointing an MD or CEO and incorporate those targets into the executive’s employment contract.
The indicators will include the advance-to-deposit ratio, non-performing loans, monitoring of large and top borrowers, and recovery targets for classified and written-off loans.
For reappointment, boards will have to submit to Bangladesh Bank the score achieved against the targets previously assigned to the CEO.
The scorecard assigns 25 points each to capital and liquidity management, asset quality, and governance and internal controls. Profitability carries 10 points, while customer service, financial inclusion and market management account for the remaining 15 points.
Banks will have to submit performance reports to Bangladesh Bank every six months.
A CEO will receive zero points for an individual performance area if the score achieved in that category is less than half of the points allocated to it, according to the policy.
At the time of appointment, boards will have to set performance targets covering three years. Each six-month evaluation report must be submitted to the central bank within 15 days after the end of the assessment period.
Banks may choose one of four six-month assessment cycles: January-June, April-September, July-December or October-March.
For existing MDs and CEOs, the first set of targets will be drawn up based on their performance over the previous three months. The next formal assessment period will run from October 2026 to March 2027.
The performance scores will also influence CEOs’ salaries, allowances, incentives and other benefits.
Bangladesh Bank will review the assessments when considering the reappointment of an MD or CEO, effectively making measurable performance a formal part of decisions over who gets to continue at the helm of a bank.
