Finally, the day after Finance Minister Arun Jately led the idea to merge public sector Banks, the government on late night Monday announced the amalgamation of three Public Sector Banks – Bank of Baroda, Vijaya Bank and Dena Bank.
The decision was taken by a ministerial panel comprising Union Finance Minister Arun Jately, Railway Minister Piyush Goyal and Defence Minister Nirmala Sitharaman. This consolidation is to be next big step after the merger of State Bank of India & it’s associates Banks in 2017. There were reports now and then, on the possibility of smaller Public Sector Banks merging to form a bigger entity. Monday’s announcement was just one officially announced by the Government.
The name of the amalgamated entity is yet to be decided which would be the third largest Bank in India. The final decision will be passed only after the Board meeting of three individual Banks who will examine the proposal.
Financial Services Secretary said that the merger will help to improve operational efficiency and customer service in the Banking industry.
Highlighted Points of the three Banks Amalgamation:
Merged Bank will have a Current & Saving account ratio of 84.06% and Capital Adequacy of 12.25%.
The merger will form a business book of 14.82 Lakh Crore.
Bank of Baroda: 10.29 Lakh Crore
Vijaya Bank: 2.79 Lakh Crore
Dena Bank: 1.72 Lakh Crore
Combined entity combined would have a total loan book of Rs. 6.40 Lakh Crore.
Total Branches will increase to 9489.
The Government assured to provide capital support to the merged entity.
Finance minister said that the Provision Coverage Ratio (PCR) of the proposal amalgamated entity will be 67.5% well above the average of Public Sector Banks at 63.7%.