Merger of BoB, Vijaya, Dena Bank to improve efficiency, governance: Moody's

New Delhi, Sep 18: Moody's Investors Service on Tuesday said the plan to merge Bank of Baroda, Vijaya Bank and Dena Bank will be credit positive as it would improve their efficiency and governance for the banks.

Alka Anbarasu, Vice President, Financial Institutions Group, Moody's Investors Service said,''The merged entity will have a market share of about 6.8% by loans - according to data as of March 2018 -- making it the third largest bank in the system.''

Moody's said BoB and Vijaya Bank have relatively better credit metrics than Dena Bank in terms of asset quality, capitalisation and profitability.

The Centre on Monday proposed the amalgamation of state-owned Bank of Baroda, Dena Bank and Vijaya Bank to create India's third largest bank as parts of reforms in the public sector banking segment.

The decision was taken at the meeting of a ministerial panel headed by Finance Minister Arun Jaitley which oversees merger proposals of state-owned banks. The other members of the panel include Railways Minister Piyush Goyal and Defence Minister Nirmala Sitharaman.