Government says it will merge Dena Bank, Vijaya Bank and Bank of Baroda
Bank of Baroda
Finance Minister Arun Jaitley said the merger would make the banks stronger, more sustainable, and increase their lending ability.
The government said Monday that it will merge Dena Bank, Vijaya Bank, and Bank of Baroda as part of the effort to revive credit and economic growth.
The new entity after the banks are merged is expected to be the country's third-largest lender.
The merger was announced by Finance Minister Arun Jaitley.
Jaitley said the merger would make the banks stronger, more sustainable, and increase their lending ability.
Jaitley added that bank lending was becoming weak, and hurting corporate-sector investments.
Also, he said, many banks were in fragile condition due to excessive lending and ballooning non-performing assets (NPAs).
"This amalgamated entity will increase banking operations," he said.
The country's largest lender — State Bank of India — had last year merged five of its subsidiary banks into itself and taken over Bharatiya Mahila Bank, a niche state-run lender for women.
The government owns majority stakes in 21 lenders, which account for more than two-thirds of banking assets in Asia's third-largest economy.
But these PSU banks also account for the lion's share of bad loans or NPAs plaguing the sector and need crores of rupees in new capital in the next two years to meet global Basel III capital norms.
(With inputs from PTI)