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Govt announces merger of Dena Bank, Vijay Bank, BoB

The mega bank merger would become the first-ever three-way consolidation of banks in India, with a combined business of Rs 14.82 lakh crore, making it India’s third largest bank

New Delhi: The government has said that state-owned Bank of Baroda, Dena Bank and Vijay Bank will be merged to create India’s third-largest lender following a hectic meeting on September 17 that took a call on the mega-merger. The ministerial panel meeting took place in Delhi and was attended by Finance Minister Arun Jaitley, Minister of Corporate Affairs Piyush Goyal and Defence Minister Nirmala Sitharaman. The merger would become the first-ever three-way consolidation of banks in India, with a combined business of Rs 14.82 lakh crore, making it India’s third-largest bank. The amalgamated entity would be a strong competitive bank with economies of scale. The wide-range synergies would enable the consolidated entity for a substantial rise in customer base, market reach and operational efficiency.
The PCR — which is speculated to have been increasing steadily — will stand at 67.5 per cent which is well above the PSB’s average of 63.7 percent. Likewise, other indicators such as Cost to income ratio, Capital Adequacy Ratio (CRAR) etc. will also get better comparatively
The strength of the merged entity could also be gauged from various indicators such as Net Non-Performing Assets (NPA) Ratio, Provisional Coverage Ratio (PCR), Cost to Income Ratio etc. For instance, the Net NPA Ratio of the merged entity will stand at 5.71 per cent, as against the PSU bank average of 12.31 per cent. The PCR — which is speculated to have been increasing steadily — will stand at 67.5 per cent which is well above the PSB’s average of 63.7 percent. Likewise, other indicators such as Cost to income ratio, Capital Adequacy Ratio (CRAR) etc. will also get better comparatively. The operating and distribution cost would also drop significantly due to the large distribution network in place which will ultimately pass on the benefits to the entity, its customers and their subsidiaries. In addition, Dena Bank and Vijay Bank will be also benefitted by the global network strength of Bank of Baroda.