Indian government announces merger of Bank of Baroda, Vijaya Bank, Dena Bank

Banking industry news : The Indian government on Monday announced the merger of three state-owned banks – Bank of Baroda, Dena Bank and Vijaya Bank, in a move to create the third largest lender in the country.

The decision regarding the merger of the three banks is seen an effort to make public sector banks stronger.

Following the combining of associate banks with SBI, the merger of Bank of Baroda, Dena Bank and Vijaya Bank marks the first consolidation in the Indian banking industry.

Put together, the combined entity formed by the three Indian banks will have a business of Rs 14.82 lakh crore, and will boast as many as 10,000 branches, supported by close to 85,000 employees.

According to Indian Finance Minister Arun Jaitley, the merger of Bank of Baroda, Dena Bank and Vijaya Bank will strengthen the three banks and also make them sustainable.

The merger is also expected to enhance their lending ability.

Arun Jaitley. Photo courtesy of Augustus Binu : facebook : flickr/Wikipedia.org

Taking a shot at the previous UPA government, Arun Jaitley said that banks took up above-normal lending in the 2008-2014 period in desperation, which has led to vast non-performing assets amounting to Rs 8.5 lakh crore. The Finance Minister alleged that these acts have impacted the economy.

Arun Jaitley also said that none of the bank employees will face adverse service condition owing to the changes being undertaken.

The merger of Bank of Baroda, Dena Bank and Vijaya Bank is being done in the hope of reviving credit growth, which otherwise has decelerated to multi-decade lows with banks finding it difficult to stay healthy because of bad loans.