The government on Monday short-listed three public sector banks – Dena Bank, Vijaya Bank, and Bank of Baroda -- for a merger aiming at creating the third largest bank in India with the amalgamated entities.
Dena Bank among the three is currently under the Reserve Bank of India's prompt corrective action and has been barred from lending.
“Two strong banks can absorb a third bank to create a globally competitive bank as the government is careful not to merge weak banks,” Finance Minister Arun Jaitley said announcing the merger at a press conference.
Jaitley advised the Boards of the three banks to consider the proposal which he called the next logical step in restructuring and strengthening the banking system.
The finance minister assured that no employee will face the axe after the merger. Jaitley also said that post the merger the ability to lend to retail and MSME sectors will increase.
This is the third biggest merger decision of the NDA government after the merger of five subsidiaries of State Bank of India (SBI) with itself and the decision to merge IDBI with LIC.
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