Centre rules out any major public sector banks merger in near future

The government is not considering any other merger proposal in public sector banks at the moment as it would wait for completion of the amalgamation of Dena Bank and Vijaya Bank with Bank of Baroda (BoB), official sources said.

The Union Cabinet last month approved the merger of these three banks to create the country's third-largest lender. The process of amalgamation is going on according to the schedule, the sources said. They added that the other proposal would be considered after the stabilisation of this three-way merger. Last month, boards of the three banks also cleared the share-swap ratio for the proposed amalgamation.

According to the Scheme of Amalgamation announced by BoB, shareholders of Vijaya Bank would get 402 equity shares of BoB for every 1,000 shares held in the bank. In the case of Dena Bank, the shareholders would get 110 shares of BoB for every 1,000 shares owned in the bank. The scheme would come into force on April 1.

The amalgamation would be the first-ever three-way consolidation of banks in India, with a combined business of Rs 14.82 lakh crore, making it the third-largest bank after State Bank of India and ICICI Bank. The merger would also create the second-largest PSB. After the merger, the number of PSBs will come down to 18.

In September 2018, the Alternative Mechanism, headed by Union Minister Arun Jaitley, gave in-principle approval for the merger of the three banks to create a global-sized lender.

(With inputs from agencies.)