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.