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The merger of Vijaya Bank and Dena Bank with Bank of Baroda moved a step ahead on Wednesday with the Union Cabinet approving a scheme of amalgamation for the same and the board of the respective banks giving their nod to the share swap ratio.
The scheme will come into force on April 1. The amalgamation will be the first-ever three-way consolidation of banks in India, with the amalgamated entity emerging as the country’s second largest public sector bank, a Cabinet statement said. Vijaya Bank and Dena Bank are transferor banks and BoB is the transferee bank.
The fair equity share exchange (share swap) ratio for the amalgamation is: 402 equity shares of ₹2 each of BoB for every 1,000 equity shares of ₹10 each of Vijaya Bank; and 110 equity shares of ₹2 each of BoB for every 1,000 equity shares of ₹10 each of Dena Bank.
Grievance redressal
The three public sector banks, in separate stock exchange notices, said a Grievance Redressal Committee (GRC) headed by Pramod Kode, a retired judge of Mumbai High Court, has been set up to address the grievances of minority shareholders.
The minority shareholders are: (a) those shareholders who either individually or collectively hold at least one per cent of the total paid-up equity capital of BoB or Vijaya Bank or Dena Bank; or (b) 100 shareholders of BoB or Vijaya Bank or Dena Bank acting collectively.
The timelines for the grievance redressal are: for filing of written grievances by minority shareholders (January 4 to January 24); submission of report with recommendations to the boards by the GRC (January 25 to January 31); and final view/decision by the boards on the recommendations of the GRC (February 1 to February 7).
The Cabinet statement said that upon commencement of the scheme, the undertakings of the transferor banks (Vijaya Bank and Dena Bank) as a going concern will be transferred to and will vest in the transferee bank (BoB), including, inter alia, all businesses, assets, rights, titles, claims, licences, approvals and other privileges and all property, all borrowings, liabilities and obligations.
Every permanent and regular officer or employee of the transferor banks will become an officer or employee and will hold his office or service therein in the transferee bank such that the pay and allowance offered to the employees/officers of transferor banks will not be less favourable as compared to what they would have drawn in the respective transferor bank, it added.
The statement elaborated that the amalgamated bank will be better equipped in the changing environment to meet the credit needs of a growing economy, absorb shocks and have the capacity to raise resources.
CH Venkatachalam, General Secretary, All India Bank Employees Association, said: “This is part of this government’s agenda to consolidate the banks. But in India, what we need is expansion of banks and not consolidation or merger.
“There is no evidence that merger of banks would strengthen them or make them more efficient. We have seen the example of five associate banks merging with SBI. No miracle has happened. On the other hand, it has resulted in closure of branches, increase in bad loans, reduction of staff, reduction in business, etc.”
On Wednesday, BoB shares closed at ₹119.40 on the BSE, down 3.16 per cent from the previous close. Vijaya Bank shares closed at ₹51.05, a tad up. Dena Bank shares closed a shade lower at ₹17.95.
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