Bank of Baroda, Dena Bank and Vijaya Bank of South India together with the government's proposal to build India's third largest bank has passed. In view of the Norsingh Committee's proposal, it is the second step of the government to achieve the solidarity of state-owned banks. Earlier, a major bank was created by mixing State Bank and its associate banks. The second phase will take 9 to 12 months to accomplish this solidarity. Banks will work separately until the procedure is complete. The reconstruction and reconciliation of the bank was first mentioned in 1994-95. One of the recommendations of the Narsingham Committee for the reform of the state-owned bank is that there will be 3-4 big banks in the country, which will have an international level of work. There will be 8-10 national banks, whose branches are spread across the country. Some will have local banks, which will work locally. And rural banks will work in rural areas. This first state-owned Indian bank is recommended to go to the stock market to collect capital.
The total business of Bank of Baroda, Dena Bank and Vijaya Bank will increase to 15 lakh crore rupees. The worst of these three banks is that of Dena Bank, who lost Rs 721 crore in the first three months of 2018. Dena Bank had to make a provision of Taka 1118 crore due to unsecured loans. Their nonperforming asset, that is, inefficient asset was 22.69 percent of the total debt. Although the debt bank was able to raise income in the interest sector. Compared to Vijaya Bank statistics, it is very favorable. Their NPAs were 6.19% of net assets and net NPAs were slightly lower than the previous quarter. Bank of Baroda received Tk 528 crores in the first quarter. Although their ineffective assets were 12 percent of the total debt.This consolidation proposal has already passed before the Dena Bank's board of directors. After that the debt bank has commented, there are a lot of shades of the Norsingham Committee's opinion. Dena Bank echoed the fact that the committee had talked of building a strong integrated bank with international components. That this integrated bank (Bank of Baroda, Vijaya and Deba) will be able to accept the challenges of the country and the international market. With this consolidation that will create financial harmony (the ingredients that will be produced in the latter part of the merge) will be able to create a beautiful stable condition.
It has also been said that through this merger it will be reached at a level which will be followed by the best practices in the banking system. Finance Secretary Rajiv Kumar said that the net NP ratio of the debt bank, which means the new NPA will be created, will come down to 5.71 percent, which is 12 percent for the state-owned banks. After the consolidation of debt, which is the inefficient asset of the debt bank, the overall asset rate will be reduced overall. It will be connected with Vijaya Bank and Bank of Baroda's ability to manage these types of resources. After consolidation, three banks can run a business in a different name under the same management, but may also take a name as a whole.
The Prime Minister said that this consolidation decision is timely. But this decision may not be comfortable. Although this consolidation was going on in 2017, a committee of three ministries formed in the opinion of the state-owned bank to create an alternative offer for solidarity. Banks will be reconstituted in accordance with the Banking Companies (Acquisition and Transfer of Undertakings) Act of 1970, and the central government has passed this decision in parliament after discussions with the Reserve Bank.
But many people think, the decision is imposed from above. The differences between the bank's culture, the independence of the board, the financial health, the mindset of the staff and the officers, and the belief that the customers are concerned about these banks. Even though the Bank of Baroda was the largest, the income from assets in the financial year 2017-18 was negative and its capital adequacy ratio was 12 percent, but not much above the recommended consistency rate of Basel 3. Operating profit is positive for the three banks, but the banks of Baroda and Dena Bank are doing losses due to making more money (on the non-performing assets). Only Vijaya Bank has seen profits in the last two years. This merger will not only give up the Vijaya Bank. There was no continuation in the growth of the bank's boarding business, as the debt did not accumulate in deposits and loans. On the other hand, the deposit of the Vijaya Bank and the rate of repurchase rate was very normal. 18.3 percent and 22.9 percent respectively. And Dena Bank has been under the Reserve Bank's Prompt Action Action for the last two years so that it does not enjoy any independence in the recruitment and credit of this bank.
There is no reason to remember that the number of state-owned banks in India that will make these banks strong. And there is not a proper pattern to remember that the level of expenditure will be minimized by the merger. After the merger of State Bank, the financial health of the main bank has been damaged. After the consolidation of banks, it may be such that the closure of branches near these banks and reducing the number of branches, going to work far away from different employees and officers, thereby increasing the likelihood of the disruption of the balance.
As long as the legal infrastructure is not being helpful in the work of banks and disciplinary measures against unscrupulous borrowers
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