The government has come up with the decision to merge Bank of Baroda, Dena Bank, and Vijaya Bank with an aim to reduce costs and provide customer services effectively.
The decision was taken at the ministerial panel meeting headed by Finance Minister Arun Jaitley which oversees merger proposals of state-owned banks. Railway Minister Piyush Goyal and Defence Minister Nirmala Sitharaman were also present at the meeting.
All three banks combinely would have total loan book of Rs.6.40 lakh crore, while total deposits of Rs.8.41 lakh crore. The merged bank will have a current and saving account ratio of 34.06% and capital adequacy of 12.25% making it the third-largest bank in India. Total branches will increase to 9489, meanwhile other branches, those are overlapping each other, may have to cut out.
“Aspirations of the fastest growing economy have to be supported by stronger and globally competitive banks, with increased choices to the stakeholders. The boards of Vijaya Bank, Dena Bank and Bank of Baroda have been advised by the alternate mechanism (the ministerial panel) to consider the proposal (for consolidation),” financial services secretary Rajiv Kumar said at a press conference.
In the merger process, the government has assured that the brand equity of all three banks will remain preserved and capital aid would also be provided to the new entity.
The merger’s rationale is increase in customer base, market reach, operational efficiency, and wider bouquet of products and services to customers.