The government will merge state-owned Vijaya Bank, Dena Bank and Bank of Baroda to create India’s third largest lender, a top government official said on Monday.
Boards of the three banks will examine amalgamation proposal, the department of financial services secretary, Rajeev Kumar, told a news conference in New Delhi. He said the banking sector needs reforms and the government is taking care of banks’ capital needs.
Rationalisation of overseas operation in banking sector is in full swing, he said, adding the government is keen to take steps so that history isn’t repeated as far as NPAs are concerned.
Shares of Dena Bank surged up to 20 per cent, while Bank of Baroda tumbled nearly 14 per cent Tuesday following merger announcement.
The scrip of Dena Bank zoomed 19.75 per cent to Rs 19.10 — its highest trading permissible limit for the day — on BSE. On the other hand, shares of Bank of Baroda dived 13.76 per cent to Rs 116.50 and Vijaya Bank lost 2.59 per cent to Rs 58.25.
The government Monday said state-owned Bank of Baroda, Vijaya Bank and Dena Bank will be merged to create the country’s third largest lender as part of efforts to revive credit and economic growth.