India proposes merger of 3 state-owned banks

Consolidation of Dena Bank, Vijaya Bank, Bank of Baroda would result in creation of country’s third-largest lender

Tand its ability to go for further consolidation.”

In the previous such mega merger, five associate banks and the Bharatiya Mahila Bank became part of the state-run State Bank of India on April 1, 2017, making the country’s largest lender among the world’s top 50 banks. Besides the Finance Minister, the Alternative Mechanism includes Defence Minister Nirmala Sitharaman and Railway Minister Piyush Goyal.

Noting that one of the banks proposed in this merger was under the Reserve Bank of India’s Prompt Corrective Action (PCA) framework on account of its massive accumulated non-performing assets (NPAs), or bad loans, Jaitley said: “The consolidated entity’s capacity to absorb a weaker bank guided our decision to propose this merger to the boards.”

According to Finance Ministry officials, the proposed merger would lead to the creation of the country’s third-largest banking entity.