First Three-Way Merger In Indian Banking Gets Cabinet Nod: Vijaya And Dena Bank To Be Merged With Bank Of BarodaBank of Baroda. (Pradeep Gaur/Mint via Getty Images)

Bank of Baroda (BoB) is set to become the third largest bank in India - behind SBI and ICICI Bank, with the Union Cabinet giving its approval to the merger of Vijaya Bank and Dena Bank with it, PTI has reported.

The press release states that “Vijaya Bank and Dena Bank are transferor banks and BoB is transferee bank.”

The merger, which will help the combined entity emerge as a globally competitive player, is aimed at cleaning up the country’s public banking system which has been dragged down by an NPA crisis.

BoB in an earlier filing with the exchanges had announced an equity swap ratio for shareholders of Dena and Vijaya banks. According to the release, Dena Bank shareholders are to receive 110 BoB shares for every 1,000 shares they hold, while Vijaya Bank shareholders are to receive 402 BoB shares for every 1,000 Vijaya Bank shares.

Union Law Minister Ravi Shankar Prasad also assured the employees of Vijaya and Dena bank saying that "There will be no impact on the service conditions of the employees and there will be no retrenchment following the merger."

The arrangement will come into force on 1 April 2019.

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