New Delhi: In an attempt to create stronger public sector banks in the country, the Central government on Monday said three state-owned lenders — Bank of Baroda, Vijaya Bank and Dena Bank — will be merged to create the country’s third largest lender. After the amalgamation of associate banks with SBI, this is first-ever consolidation in the Indian banking sector. The merged entity will have a combined business of Rs 14.82 lakh crore, with 10,000 branches and around 85,000 employees.
Finance minister Arun Jaitley said the merger will make the banks stronger and sustainable as well as increase their lending ability. He alleged that banks undertook above-normal lending during 2008-2014 as “if there was no tomorrow” resulting in huge non-performing assets to the tune of Rs 8.5 lakh crore. “This took its toll on the economy,” he said.
The move is also expected to revive credit grow-th, which has slowed to multi-decade lows as banks struggle with bad loans. “The consolidation will help in creating a strong globally competitive bank with economies of scale,” said a finance ministry official. He said “no employee will face service condition adverse to his present condition” following the proposed merger of PSBs.
