Beginning Monday, 1 April 2019, all branches of Vijaya Bank and Dena Bank will function as Bank of Baroda outlets, following the coming into force of the amalgamation of the two lenders with BoB, the Reserve Bank of India (RBI) said on Saturday.
The scheme of amalgamation of state-run lenders, Vijaya Bank and Dena Bank with their larger peer Bank of Baroda, announced by the government on 2 January 2019, and since approved by the Reserve Bank of India (RBI) thereafter comes into force on Monday, 1 April 2019.
“Consequently, all branches of Vijaya Bank and Dena Bank will function as branches of Bank of Baroda from April 1, 2019. Customers, including depositors of Vijaya Bank and Dena Bank will be treated as customers of Bank of Baroda with effect from April 1, 2019,” an RBI release stated.
Under the scheme of amalgamation, shareholders of Vijaya Bank will get 402 equity shares of BoB for every 1,000 shares held while shareholders of Dena Bank will get 110 shares of BoB for every 1,000 shares they held.
On the basis of this share swap ratio, the government’s shareholding in the merged entity will rise from 63.7 per cent to 65.7 per cent.
With a combined business of about Rs15,00,000 crore, the merged entity is now the third-largest lender in India. This is also India's first-ever three-way consolidation of banks in India.
In terms of the number of branches, Bank of Baroda ranks second in India across all banks. The merged entity with nearly 9,500 branches as will help BoB increase its reach in the western, southern and north-eastern regions. However, to remove overlapping, it is expected that some branches of either of the banks will be shut down.
Banking operations and accounts held by Dena Bank and Vijaya Bank will be transferred to Bank of Baroda post merger, which would lead to some changes for the customers of these two banks.
Customers of Dena Bank and Vijaya Bank may get new passbooks, cheque books, debit and credit cards, and even new account numbers and customer IDs. This means that the customers will have to get their banking details updated with entities like the Income Tax Department, mutual funds, insurance companies, etc.
Some aspects, like the interest rate on fixed deposits or recurring deposits, and existing loans, are not likely to change.
The government in September last year had announced merger of Vijaya Bank and Dena Bank with Bank of Baroda, aiming to create the third-largest lender after the SBI and ICICI Bank.
Ahead of the merger, the government last week announced infusion of Rs5,042 crore in BoB to enhance capital base of the lender ahead of the merger.