Bank Merger of Bank of Baroda, Dena Bank and Vijaya Bank Amalgamation

Why the Bank of Baroda, Dena Bank, and Vijaya Bank are Merging?

The Government of India recently proposed the Amalgamation of three State-owned or Public sector in which the majority of shares are held by Government Bank that is Bank of Baroda, Vijaya Bank, and Dena Bank and by amalgamating these three banks it will form the third largest bank in India.

The performance of the public sectors banks was not up to the mark from last year Economic survey and various report. The Government of India has taken several measures to enhance the performance of these public sector banks namely:

Recapitalization of Public sector banks
Taking Measures to Reduces the NPAs of the public sector Bank
Finally the Merger of Bank of Baroda, Dena Bank, and Vijaya Bank

To improve the performance of the public sectors bank and the measure to reduces the NPAs of Public sector bank, Amalgamation of Bank of Baroda, Dena Bank, and Vijaya Bank has taken place and this is the main reason behind this merger proposal

check out Members of Mysore city corporation

What is the Alternative mechanism?

Alternative Mechanism is a Ministerial panel headed by Finance Minister in which the merger proposal was decided in this panel and all procedure takes place in merger activity will under control of the Alternative mechanism

Amalgamation:(Merging)

The three public sector bank is Merging together to observe the weak bank whose NPAs is increasing, Bank of Baroda, Dena Bank and Vijaya Bank are the three public sector bank we are talking about, here the weak Bank is Dena Bank and Bank Of Baroda and Vijaya Bank are the well-performing bank

These two well performing bank will observe the weak Dena Bank and forms a balanced and third largest bank in India whose employee is 85,675.

Why Dena bank is considered as weak Bank?

Dena is under Prompt Corrective Action(PCA) of RBI in which the bank under PCA will have several restrictions in case of providing the loan to the public is limited and the banks can only provide loans to the government sector because of Guaranteed repayments.

Dena NPAs is raised at 11.04% which is not good for a commercial bank to survive and its risk-taking level is so weak that its CAR is Only 10.6% again it is a negative thing for a bank

Considering the above points Dena Bank will be called as the weak bank, therefore, it is merging with the two strong banks.

Benefits After Merging

Third largest bank in India after merging.
Dena Bank NPA is 11.04% and will be reduced to 5.7% after merging
Stronger and Globally competitive
Economies of Scale
Raise in Customer base
Market reach and operational efficiency
Increase Lending capacity

Procedure

It will take 6 months to 12 months to complete the Amalgamation Process
Initial Approval by the Board of Bank in India
Formation of Scheme and procedure for Amalgamation
Parliment's Approval

Well, that's it, for now, the above is the analysis of Amalgamation of Three Public sector bank in India hope you get some knowledge about the merger proposal of Government of India.

If you have any doubts feel free to comment below ill will reply Thanks for reading.

About Rahul G Rao

I’m the founder of CurrentAffairIndia.com and I loves to post articles about Current Affairs In India and also shares some video from YouTube Channel. I'm the only person who runs this website and lives in Mysore, who to be a self dependent person