NPA mess: Modi government proposes merger of Dena Bank, Vijaya Bank and Bank of Baroda into one entity

Sep 17 (AZINS) Modi government on Monday proposed merger of Dena bank, Vijaya Bank and Bank of Baroda into one entity. The single unit will become the third largest public sector bank in the country. FM Arun Jaitley also assured that the employees of all these three banks will be protected.

Addressing the issue of Non-Performing Assets, union finance minitser Arun Jaitley attacking the UPA era said, "In last few years, PSBs have faced a challenge. They were large in numbers and 2008-2014 became a peak lending period. The nature of lending was as if there is no tomorrow. That took a toll on the economy."

"This was accompanied by sweeping the NPAs below the carpet so that the real picture doesn't come out", Jaitley added.

Arun Jaitley further added, "Restructuring and evergreening of loans led to a rise in NPAs. After 2015, once the real picture was known through asset review by the RBI, both the govt and the RBI started taking corrective steps. As a result, bank credit lending was becoming weaker and private sector investment was being affected. Many banks were in a fragile condition".

Reacting on the proposal of merger, the FM said that the government had announced in the Union Budget that consolidation of banks will be on the agenda of the government. He further assured that there isn't any need to worry as the amalgmation of banks will be fruitful to the economy.

Citing the merger of SBI'e entities, FM said that it will benefit the working conditions of the employees of smaller banks.

However, FM did not talk about the name of the new entity and said that it will be revealed later. He further said that the employees of Dena Bank will benfit the most.

He also informed that the RBI was also consulted before the proposal.