Dena Bank, Vijaya Bank and Bank of Baroda to be merged
New Delhi, Sep 17: The Union Government has decided to merge three PSU banks - Dena Bank, Vijaya Bank and Bank of Baroda. The newly merged entity would be the third largest bank of the country, said Financial Services Secretary Rajiv Kumar.
The government had earlier asked the Reserve Bank of India (RBI) to prepare a list of candidates for the merger among 21 government banks as it seeks to strengthen a banking system laden with bad debt.
To allay the fears and speculations of the employees of these banks, Finance Minister Arun Jaitley said, "No employee will face any service conditions which are adverse in nature. The best of the service conditions will apply to all of them."
A
prime
reason
for
creating
large
banks
is
to
address
the
toxic
loan
issue.
Over
the
past
three
years,
banks
have
seen
a
large
chunk
of
their
loan
books
turning
sour,
while
demand
for
fresh
loans
has
remained
low.
As
a
result,
the
share
of
bad
loans
as
a
percentage
to
total
loans
has
been
rising.
The
government
had
merged
five
associate
banks
and
Bharatiya
Mahila
Bank
with
SBI
on
April
1,
2017,
to
catapulte
the
country's
largest
lender
to
among
the
top
50
banks
in
the
world.