BANKS CONSOLIDATION

About:

• This was proposed by the Alternative Mechanism comprising of its Chairperson, the Union Finance Minister Arun Jaitley and Cabinet Ministers, Piyush Goyal and Nirmala Sitharaman.
  
  
• The envisaged amalgamation will be the First-ever three-way consolidation of banks in India, with a combined business of Rs. 14.82 lakh crore, making it India’s Third Largest Bank.
  
  
• Background: The government had announced in the budget that consolidation of banks was also on the agenda. Earlier, the government had merged five subsidiaries of SBI into State Bank of India.
  
  

Strengths of the envisaged amalgamated entity are –

• Leveraging of networks, low-cost deposits and subsidiaries of the three banks will lead to substantial rise in customer base, market reach, operational efficiency, wider bouquet of products and services, and improved access for customers.
  
  
• The consolidation will help create a strong globally competitive bank. Global network strength of Bank of Baroda will be leveraged to enable customers of Dena Bank and Vijaya Bank to have global access  
  
  
• Dena Bank’s strength in MSME will further augment the strength of the other two to position the amalgamated bank for being an MSME Udyamimitra
  
  
• Net NPA ratio at 5.71% significantly better than PSB average (12.13%). Provision Coverage Ratio (PCR) at 67.5% is well above Public Sector Banks (PSBs) average (63.7%).