NEW DELHI: In a reform measure aimed at further consolidation, the government on Monday announced the merger of three state-run banks — Dena Bank, Vijaya Bank and the Bank of Baroda — that will make it the country’s third largest bank with a combined business of Rs.14.82 lakh crore.
Finance Minister Arun Jaitley (pictured) announced the merger proposal at a press conference saying that the respective boards of the three banks have been directed to consider the proposal at the earliest.
The three banks will continue to operate as independent banks till the proposal is passed by the boards of individual banks and the name of the merged bank would be decided by them in the scheme of amalgamation, he said.
Jaitley said the merger would create a sustainable mega-bank which would be third largest in the country.
“The amalgamated entity would increase banking operations and its ability to go for further consolidation,” he said.
The merger decision was taken by the “alternative mechanism”, which met on Monday. The meeting chaired by Jaitley was attended by Ministers Piyush Goyal and Nirmala Sitharaman.
This is the second such exercise in the last 18 months. In the previous such mega merger, five associate banks and the Bharatiya Mahila Bank became part of the state-run State Bank of India on April 1, 2017, making the country’s largest lender among the world’s top 50 banks.
Noting that one of the banks proposed in this merger was under the Reserve Bank of India’s Prompt Corrective Action (PCA) framework on account of its massive accumulated non-performing assets (NPAs), or bad loans, Jaitley said: “The consolidated entity’s capacity to absorb a weaker bank guided our decision to propose this merger to the boards.”
“No employee would face adverse service conditions due to the merger,” he added.
Jaitley said while consolidation of banks was on agenda and was even announced in the Budget, the government was waiting for the non-performing assets (NPA) situation to take a turn for the better before going ahead. — IANS
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