Banks begin disbursing staff bonuses as fiscal year ends, Nabil sends 3-month salary equivalent

Kathmandu: As the fiscal year concludes, banks across Nepal have begun transferring bonuses into employee accounts in accordance with the Bonus Act 1973.

As per the law, every profit-making institution is required to allocate 10 percent of its net annual profit as employee bonuses.

Section 5(1) of the Bonus Act mandates, “Every profit-earning establishment must allocate an amount equivalent to 10 percent of its net annual profit for distribution as bonuses to employees.” Based on this provision, banks have long followed the practice of distributing bonuses proportional to their yearly profits.

Some commercial banks provide bonuses amounting to as much as six to seven months’ basic salary. While certain banks wait until external audits are complete before disbursing bonuses, others give a portion during fiscal closing and distribute the remainder after the audit, typically during the annual general meeting (AGM).

Banks with government ownership follow different rules. According to Section 5(2) of the Bonus Act, such banks are required to distribute either 5 percent of their net profit or a bonus equivalent to three months’ salary—whichever is higher. Government-invested banks have thus been distributing bonuses in accordance with this guideline.

Private sector banks, however, continue to allocate the full 10 percent of annual profits as employee bonuses. Some have already begun partial disbursements into staff accounts under the “closing bonus” category, while others plan to release the full bonus in a lump sum during their AGM.

Among these, Nabil Bank—the country’s leading private bank—has credited a “closing bonus” equivalent to three months’ salary to its employees’ accounts. A Nabil staff member confirmed receiving the bonus, which is seen as an advance before the remaining bonus is disbursed after external auditing.

Typically, banks use performance-based calculations to determine the size of interim bonuses, with final settlements done after their AGMs. Nabil Bank, known for maintaining the highest profitability among commercial banks, has continued this trend.

According to its annual report for fiscal year 2023/24, Nabil Bank currently employs 2,480 staff members.