'Merger of banks will make them commercially successful'

Principal Economic Advisor to the Ministry of Finance, Sanjeev Sanyal, said that the decision to merge three Public Sector Banks, namely, Vijaya Bank, Dena Bank, and the Bank of Baroda will make them commercially successful.

In an exclusive interview to ANI, Sanyal said, "The merger has been done on a commercial basis. After a research, we felt that the merger of these three banks would increase their commercial viability. There are more than 20 PSU banks now. The talk of consolidation was going on for a long time. The merger of these three banks will create a somewhat bigger entity which will be more successful commercially."

Dispelling fears that the merger might prove harmful to the employees of the banks and the shareholders, Sanyal added, "There should not be a loss of any kind. The shareholder or the account holder will not be able to make any difference. The delivery of the system will be much better, which will come with synergies, becoming a platform, and everyone will benefit from it. This has been done only to increase viability."

Sanyal, however, stated that the Reserve Bank of India is well equipped with a foreign exchange reserve of USD 400 billion, adding that the Rupee is not the only currency that is faring badly in the world.

"The Rupee has indeed fallen well below the dollar. But, look at any currency for the past five years. The Chinese Yuan, Euro, or the British Pound are at the same level as the Rupee. I believe that the RBI has forex reserve of 400 billion dollars. Even at this level, the Rupee has been very competitive and our assets, stocks, equity and debt have been very attractive," he noted.

Department of Financial Services(DFS) Secretary Rajiv Kumar on Monday announced that it has decided to facilitate a merger of Dena Bank, Vijaya Bank and Bank of Baroda.

The consolidation of the three banks is expected to create a strong globally competitive bank with economies of scale and enable the realisation of wide-ranging synergies.