The Government of India recently unveiled its plan to merge Vijaya Bank, Bank of Baroda, and Dena Bank to create the third-biggest bank in India in an effort to organise the banking system in the country. All the three banks that will be merged into a single entity are public sector banks.
Mr. Arun Jaitley, the Union Finance Minister, said that merging the three banks will make them more sustainable and will also increase the lending ability of these banks. He further added that employees of these banks will not have to face any adverse service conditions and that brand equity will be maintained.
The board members of all three banks that will be involved in the proposed merger are expected to consider the government’s proposal and chart out a roadmap for the amalgamation process.
Mr. Rajiv Kumar, Financial Services Secretary, has said the merger will help these banks improve their customer services and operational efficiency. He added that the merged entity would have low-cost deposits, synergies for network, a capital buffer of almost 12%, and subsidiaries across the country. He also mentioned that the Government of India would continue to offer capital support to the merged entity.
The Government of India had previously made a proposal to consolidate the State Bank of India (SBI) group. This proposal resulted in State Bank of India absorbing Bharatiya Mahila Bank and five associate banks. The whole process was completed in the year 2017.
Mr. PS Jayakumar, the MD of Bank of Baroda, said that the board members of the bank will be meeting soon to discuss the proposed merger. He added that the complete merger process might take a total of 6 months.
Sources: The Times of India, Economic Times