The Union Government is all set to merge Bank of Baroda, Vijaya Bank and Dena Bank in what is slated to be the second significant merger in the banking sector, after that of SBI associate banks with the SBI. The merger will create the third largest globally competitive bank in India. The move augurs well for the staff of the three banks.
According to Union Finance Minister Arun Jaitley, this is a step in the direction of consolidation of the remaining state-owned banks as part of banking reforms, which has been on their agenda for some time now.
The employees of the three banks involved will not have to fear any adverse impact on their careers, as the Finance Minister has assured that all of them will enjoy the best of service conditions and their interests will be preserved. In fact, the staff of the relatively smaller banks will see improved working conditions.
The merger will witness several advantages in terms of economies of scale, low-cost deposits, expanded and widespread customer base, improved market reach, as well as better range of products and services. With the capital adequacy ratio of the merged entity at 12.25 per cent, which is well above the regulatory norm of 10.875 per cent, the bank will be better equipped to tap capital markets. In addition, the Government will also ensure support in terms of capital.
