Govt paves way for merger of Bank of Baroda, Vijaya Bank and Dena Bank

The envisaged amalgamation will be the first-ever three-way consolidation of banks in India, with a combined business of Rs 14.82 lakh crore, making it India’s third largest bank.

The government has given its go ahead for the merger of three public sector banks (PSBs) – Bank of Baroda, Vijaya Bank and Dena Bank.
 
The Alternative Mechanism headed by Union Finance Minister Arun Jaitley and other ministers Piyush Goyal and Nirmala Sitharaman held a meeting in New Delhi on Monday to discuss the issue.
 
The envisaged amalgamation will be the first-ever three-way consolidation of banks in India, with a combined business of Rs 14.82 lakh crore, making it India’s third largest bank. 
 
As per an official note by Ministry of Finance released on Monday, the consolidation will help create a strong globally competitive bank with economies of scale and enable realisation of wide-ranging synergies. 
 
"Leveraging of networks, low-cost deposits and subsidiaries of the three banks has the potential of yielding significant synergies for positioning the consolidated entity for substantial rise in customer base, market reach, operational efficiency, wider bouquet of products and services, and improved access for customers," it added.  
 
The Provision Coverage Ratio (PCR) of all these three banks stands at 67.5 per cent, which is well above Public Sector Banks (PSBs) average (63.7 per cent), and it is steadily increasing.
 
The Net NPA ratio stands at 5.71 per cent, which is significantly better than PSB average (12.13 per cent). The cost to income ratio is 48.94 per cent better than the PSB average of 53.92 per cent.
 

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