The centre has proposed an amalgamation of state-owned Bank of Baroda, Dena Bank and Vijaya Bank to create India’s third largest public sector bank.
The alternative mechanism under Finance Minister Arun Jaitley has advised the boards of the three banks to consider the proposal. The new amalgamated bank will be a strong competitive bank with economies of scale. Jailtey said that the government has been careful in not merging weak banks.
However, the centre has sought to allay any fear on part of employees, giving assurance that no one will face any adverse service conditions after the amalgamation.
Taking yet another step in consolidation process, the government has also moved to offload its majority stake in IDBI Bank to Life Insurance Corporation of India. Finance minister also came down hard on the UPA regime on the issue of the bank NPAs. He said that the NPAs jumped manifold during UPA regime and were swept under the carpet by the then govt.
He said that the bank lending before 2008 was Rs 18 lakh crore which jumped to Rs 55 lakh crore between 2008 and 2014. Citing the merger of SBI’e entities, jaitley said that it will benefit the working conditions of the employees of smaller banks.
No time frame has been given for the completion of the process. The first big merger affected by the NDA was the merger of five associate banks of State Bank of India with itself.