Another Elephant Organisation? Government Announces Merger Of Three State-run BanksBank of Baroda in New Delhi, India. (Pradeep Gaur/Mint via Getty Images) 

In a push for consolidation in the banking sector, the Union Government announced its plan to merge three state-run banks namely the Bank of Baroda (BoB), Dena Bank and Vijaya Bank. Post the merger, the resultant bank is expected to be the third largest lender, and this move follows earlier restructuring measures in the financial sector like the merger of the State Bank of India’s five subsidiaries with the parent bank.

The announcement on the merger of BoB, Dena and Vijaya Banks came after a meeting of the alternate mechanism ministerial panel consisting of Finance Minister Arun Jaitley, Railway Minister Piyush Goel and Defence Minister Nirmala Sitharaman. It is expected that the merger process could last for six months as all the requisite approvals from shareholders, regulators and government would be required. The financial services secretary while giving details of the merger proposal also assured that the government would provide adequate capital until the merger was complete.

The push behind consolidating the numerous state-run banks into a few large ones is primarily intended to develop operational synergies and ensure efficient functioning of PSBs which are also reeling under the effect of an NPA problem. In a bid to ensure that the merger process is smooth, the Finance Minister explicitly reassured employees about the security of their jobs and that there would be no adverse effect on their service conditions as well.

An Appeal...

Dear Reader,

As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.

Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.

We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.

Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.

Become A Patron
Become A Subscriber
Advertisement