as embezzlements by Hall-mark, Bismillah Group denote lack of enforcement of surveillance, regulatory oversight and prudential management. Second, shortfall of capital by the four state-owned commercial banks (Sonali, Janata, Agrani and Rupali banks) imposed a condition that government would have to restore capital positions of these banks under the conditions laid down by the IMF.
To meet the requirement of the IMF, the finance ministry decided to provide Tk. 4100 crore in the first phase against their capital shortfall of Tk. 8863 crore. Third, return on Assets (ROA) indicates the productivity of the assets i.e. how much income is earned from per unit of assets. According to Basel- accord, ROA should be more than one percent.
On the other hand, return on Equity (ROE) is another important measure of earning and profitability determination which indicates net income after tax to total equity. State owned commercial banks (SCBs) have achieved nearly zero percent of ROA over the period of 2007 to 2012. The scenario is much worst in case of Development Financial Institutions (DFIs) while most of the time ROA was less than one percent in 2010 to 2012. In 2012, overall ROA in the banking sector was 0.60 percent. It these trends continue then overall ROA in the banking sector might decrease to 0.55 percent in 2013.
Insignificant profit during this period has occurred due to the worst ratio of ROA scenario in SCBs and DFIs. The position of foreign commercial banks (FCBs) was strong over the whole period. The situation of DFIs is not found better due to the operating loss incurred by Bangladesh Krishi Bank (BKB) and Rajshahi Krishi Unnayan Bank (RAKUB).
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