The government has recommended the merger of state-owned Vijaya Bank, Dena Bank and Bank of Baroda into a single entity that would make it India’s third largest lender.
Department of financial services secretary, Rajeev Kumar, said that the proposal has been forwarded to the banks and their respective boards will now be taking the same into consideration.
In a press conference immediately following the announcement, Finance Minister Arun Jaitley said that the move is part of the “first step” in the consolidation of banks as announced in the budget
“Government had announced in the budget that consolidation of banks was also in our agenda and the first step has been announced,” said Jaitley.
He assured that employees of the banks have no need to worry because “this amalgamated entity will increase the banking operations. Its ability to increase and expand will be inevitable.”
“No employee will face any service conditions which are adverse in nature. The best of the service conditions will apply to all of them,” he said.
“The consolidation,” Jaitley said, “will help create a strong globally competitive bank with economies of scale and enable realisation of wide-ranging synergies.”
The FM said that it will be the first-ever three-way consolidation of banks in India with a combined business of Rs 14.82 lakh crore.
He said the banking sector needs reforms and the government is taking care of banks’ capital needs.
“Government had suggested to the banks to consider this proposal and hopefully the boards of the banks will meet and after adequate consultation will take an appropriate decision in this regard,” Jaitley said.
The Finance Minister highlighted how the global network strength of Bank of Baroda will help customers of Dena Bank and Vijaya Bank to have global access while Dena Bank’s strength in MSME will augment the strength of the other two to position the amalgamated bank for being an MSME Udyamimitra.
The Finance Minister added that the proposal has been forwarded to the banks. Their respective boards will meet to take an appropriate decision on the matter.