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As part of it's efforts to clean up the Indian Banking system, the government today announced that it is going to merge 3 top Indian state-owned banks, Bank of Baroda (BoB), Vijaya Bank and Dena Bank to make a single bank. This single banking entity will become India's third argest bank.
Announcing the plan, Union finance minister Arun Jaitley said the merger will make the banks
stronger and sustainable as well as increase their lending ability. The move follows top lender State Bank of India last year merging with itself five of its subsidiary banks and taking over Bharatiya Mahila Bank, a niche state-run lender for women.
The amalgamated bank would be the third largest bank in India and will be strong competitive lender with economies of scale, he said, adding the three would have synergies for network, low-cost deposits and subsidiaries. The government will continue to provide capital support to the merged bank.
Important Points to Note :
- The merged bank will have an advances base of Rs 6.4 lakh crore
- It will have a deposit base of Rs 8.41 lakh crore
- In absolute terms, the gross non performing assets will be at roughly Rs 80,000 crore
- That suggests that the gross NPA ratio will work out to be about 13 percent.
Will this merger affect Employees ?
As per the statement of the Secretary Department of Financial Services, Rajeev Kumar, the employees interest would be protected in the merger process. The merger of five SBI associate banks was done without any job losses, he said. The three banks will continue to work independently post merger.
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