Nearly 20 days after the proposal to merge Bank of Baroda, Vijaya Bank and Dena Bank into India’s third largest bank was made by the Narendra Modi government, the board members of all the three banks have given their approval. The proposal now has been sent to the government for its official approval, news agency PTI reported.
The government had proposed the merger of the three banks on October 17, with an aim to build a strong bank by combining the resources and management of two strong banks (BoB and Vijaya) and one weak bank (Dena Bank).
The next step for the merger is getting government’s formal approval, followed by the swap ration, Bank of Baroda MD and CEO PS Jayakumar told reporters. The merger is expected to take four to six months to complete.
Of the three banks, Dena Bank has the highest non-performing asset (NPA) ratio of 11.04% and lowest business of merely Rs 1.72 lakh crore. While other two banks — BoB and Vijaya — have low NPAs and higher businesses. BoB has 5.4% NPA and Rs 10.2 lakh crore worth business and Vijaya Bank has 4.10% NPA and Rs 2 lakh crore worth business.
The BoB-Vijaya-Dena merger will be the first-ever three-way consolidation of banks in the country, through the share swap. In April 2017, India largest lender State Bank of India merged with itself five of its subsidiary and took over Bharatiya Mahila Bank. Now SBI has a total of Rs 550 billion in combined assets, putting it among top 50 global lenders.
After the BoB, Vijaya and Dena merger, the number of Public Sector Banks (PSU) will come down to 19 from 21.