Five Commercial Banks to Withhold Advance Employee Bonuses This Year

Five commercial banks, NIC Asia Bank, Himalayan Bank, Nepal Investment Mega Bank, Prabhu Bank, and Prime Commercial Bank; are set to refrain from distributing advance bonuses to their employees this year.

Nepal’s banks and financial institutions have traditionally distributed a portion of the employee bonus shortly after the end of the fiscal year, with the remaining amount generally paid after the annual general meeting.

However, the five banks are not planning to provide advance bonuses in the first week of Shrawan from the profits earned in the last fiscal year.

The Bonus Act requires every profit-making establishment to allocate 10% of its net profit for employee bonuses. Section 5 of the Act states that every establishment earning a profit must set aside an amount equivalent to 10% of its net profit earned during a fiscal year for distribution as employee bonuses.

Based on this provision, banks have traditionally distributed a portion of the bonus after the end of the fiscal year and the remaining amount after their annual general meetings.

The banks have decided to wait for the completion of the external audit and approval of their financial statements by Nepal Rastra Bank before determining and distributing employee bonuses according to their financial capacity.

Himalayan Bank, Prabhu Bank, NIC Asia Bank, and Nepal Investment Mega Bank are facing increased non-performing loans and higher provisioning requirements. Some of these banks have also reported accumulated losses, making them cautious about distributing advance bonuses before their financial statements are finalized and approved.

Prime Commercial Bank, meanwhile, has historically been regarded as one of the banks offering comparatively high employee bonuses. Although it is considered among the banks with the potential to provide a substantial bonus this year, employees say the bank has not yet distributed an advance bonus.