CHAPTER 1

INTRODUCTION

1. Introduction:
Bank of Baroda is one among the foremost outstanding banks in Asian nation, having its total
assets as RS one,43,146 Crores as on thirty first March 2007.The bank was based by prince
Sayajiro Gaekwad three (also known ae Shrimant Gopalrao Gaekwad) , then prince of Baroda
on twentieth of July 1908 with a paid capital of RS ten lacs. From its introduction in an
exceedingly little building of Baroda, the bank has return an extended thanks to accomplish its
current position united of the foremost vital banks in Asian nation. On nineteenth of July 1969,
Bank of Baroda was nationalized by the govt of Asian nation with thirteen alternative industrial
banks.

The bank offers a good array of tailored and specialised repaired to fulfill the various desires of
its customers and these services have categorised into personal Banking, Business Banking,
company Banking, International Banking, Treasury Banking and Rural Banking Services.

DEFINITION OF BANK:

BANK DEFINITION:

A institution that's licenced to influence cash and its substitutes by acceptive time and demand
deposits, creating loans, finance in securities, The bank generates profits from th distinction
within the interest rates charged and paid.

MEANING OF BANK:

A bank could be a institution licenced by a government. Its primary activities embody borrowing
and disposal cash. In Japan, banks area unit sometimes the nexus of a cross-share holding entity
referred to as thezaibatsu. In France, scourge assurance is rife, as most banks provide insurance
services (and currently property services) to their shoppers.
HISTORY OF BANK OF BARODA:

1990s

 1990: BOB opened a OBU in Mauritius, however they closed its representative
workplace in state capital.
 1991: London branches of Union Bank of Asian nation and geographical region & Sind
Bank (P&S) were appropriated by BOB. P&S’s branch had been established before 1970
and Union Bank’s when 1980.
 1992: BOB was incorporated its operations in African country into an area subsidiary
with atiny low share of shares quoted on the national capital exchange.
 1993: BOB conjointly closed its OBU in Bahrain.
 1996: BOB entered the capital market in Gregorian calendar month with AN Initial
Public giving (IPO). the govt of Asian nation continues to be the biggest stockholder,
owing sixty six of the bank’s equity.
 1997: BOB conjointly opened a branch in metropolis.
 1998: BOB bought out its partners in IUB International Finance in port. Apparently this
was a response to regulative changes following Hong Kong’s reversion to the People’s
Republic of China. BOB conjointly nonheritable geographical region Cooperative Bank
in an exceedingly rescue.
 1999: BOB incorporated in Bareilly Corporation Bank in another rescue. At the time,
Bareilly had sixty four branches, together with four in Delhi.

In Guyana, BOB incorporated its branch as a subsidiary, Bank of Baroda South American
country.

BOB additional a branch in Mauritius, however closed its Harrow Branch in London.

2000s:

 2000: BOB established Bank of Baroda (Botswana).

 2002: BOB non heritable Benares banking company (BSB) at the depository financial
institution of India’s request. BSB was established in 1946 however derived its origins
back to 1871 and its operate as its operate because the treasury workplace of the Benares
 state. In 1964, BSB had nonheritable Bareilly Bank (est. 1934), with seven branches; it
conjointly had appropriated Lucknow Bank in 1968. The acquisition of BSB brought
BOB a hundred and five new branches.
 2002: Bank of Baroda (Uganda) was listed on the Uganda Securities Exchange (USE).
 2003: BOB opened AN OBU in urban center.
 2004: BOB nonheritable the unsuccessful Gujarat native space Bank, and came back to
Tanzania by establishing a subsidiary in Dar-es-Salaam. BOB conjointly opened a
representative workplace every in Kuala Lumpur, Malaysia, and state, China.
 2005: BOB engineered a worldwide information Center (DC) in urban center for running
its centralized banking answer (CBS) and alternative applications in additional than 1900
branches across Asian nation and 20 alternative counties wherever the bank operates.
BOB conjointly opened a representative workplace in Asian nation.
 2006: BOB established in Offshore Banking Unit (OBU) in Singapore.
 2007: BOB’s total business crossed 2.09 trillion (short scale), its branches crossed 2000,
and its international client base twenty nine million folks.
 2008: BOB opened a branch in Canton, China and in Kenton, Harrow uk. BOB
conjointly opened a venture insurance company with Andhra Bank.
 2009: BOB conjointly registered in 2017 and it's three branches, 2 in metropolis, one in
Wellington.

OVERVIEW OF BANK OF BARODA:

On 1st April ,2019 for the first time in India 3 Nationalised Banks i.e. Dena Bank and Vijaya
Bank, have merged with Bank of Baroda. Bank of Baroda is now the second largest Nationalised
Bank in India. They are worth Rs.15 lakh crores. Bank of Baroda now has 9500 branches in
India. Their branches in Northeast India, South India and Western India have grown a lot. Due to
Dena Bank and Vijaya Bank merger with Bank of Baroda, some branches are facing financial
problems, some of the branches be will shut down. All over India, Bank of Baroda has 13,400
ATMs. They have more than 85,000 employees. The bank provides services to 12 crores
customers. In Bank of Baroda’s zonal office in Bengaluru General Manager Birender Kumar said
that, customer will experience better banking services because of the merger. Bank of Baroda
will provide customers cash management solutions, Investment advice, financial planning etc.
On 26th December 2018, employees of Dena Bank and Vijaya Bank went on a strike. The bank
unions said that employees went on strike because many branches would shut down due to the
merger. This would make banking very difficult for customers. Bank of Baroda has promised
that all the employees and customer problems, will be solved within one and a half years. Bank
of Baroda said that employees will benefit from this merger

Subsidiaries of BANK OF BARODA:

BOB Capital Markets (BOBCAPS) is a SEBI-registered investment banking company based in

Mumbai, Maharashtra. It is a completely closely-held subsidiary of Bank of Baroda. Its monetary
services portfolio includes initial public offerings, private placement of debts, corporate
restructuring, business valuation, mergers and acquisition, project appraisal, loan syndication,
institutional equity research, and brokerage.

Bob cards Ltd may be a mastercard company, 100% subsidiary of Bank of Baroda. The company
is within the business of Credit cards, Acquiring Business & back end support for Debit cards
operations to Bank of Baroda. Bank of Baroda had introduced its 1st charged card named
BOBCARD within the year 1984. The whole operation of this plastic card was managed by
mastercard division of Bank of Baroda. It established a completely closely-held subsidiary,
Bobcards Limited in the year 1994 to cater to the need of rapidly growing credit card industry in
a focused manner. BOBCARDS Ltd is that the 1st Non-banking company in Asian country
issuance credit cards.

The Nainital Bank Ltd. was established within the year 1922 with the target to cater banking
desires of the individuals of the region. In the year 1973, Reserve Bank of India directed Bank of
Baroda, to manage the affairs of the Nainital Bank Limited.

1.2 Introduction to Mergers:

A Merger is an agreement that unites two existing companies into one new company. Mergers
are commonly done to expand a company’s reach, expand into new segments, or gain market
share. All of these are done to please shareholders and create value
1.3Types of mergers:
The following are the different types of Mergers:
1.3.1. Conglomerate Mergers:
When two or more companies engaged in unrelated business activities. The firms may operate in
different industries or different geographical regions. Pure conglomerate involves two firms that
have nothing in common. Mixed conglomeratetakes place between organizations that, while
operating in unrelated business activities, are actually trying to gain product or market extensions
through the merger
1.3.2. Congeneric Mergers:
Congeneric merger also known as Product Extension merger. when two or more companies
operate in the same market or sector with overlapping factors, such as technology, marketing,
production processes, research and developmentA product extension merger is achieved when a
new product line from one company is added to an existing product line of the other company.
1.3.3. Market Extension Mergers:
When two companies that operates the same products but compete in different markets.
Companies that engage in a market extension merger seek to gain access to a bigger market and,
thus, a bigger client base.
1.3.4. Horizontal Mergers:
When two companies operating in the same industries two or more competitors offering the same
products or services. the goal is to create a larger business with greater market share and
economies of scale since competition among fewer companies tends to be higher
1.3.5. Vertical Mergers:
When two companies that produce parts or services for a specific finished product merge, the
union is referred to as a Vertical merger.This occurs when two companies operating at different
levels within the same industry’s supply chain combine their operations. Objective is to increase
synergies achieved through the cost reduction which results from merging with one or more
supply companies.
2. Need For The Study:

The present study is an attempt to find out the reasons for the raise of merger deal between BOB,
Dena bank and Vijaya bank and the reasons for merging.
3. Scope:
The present study is based on the reasons for merging of BOB , Dena bank and Vijaya bank.

4. Objectives Of The Study:

 1. To know the reasons of BOB merger with Dena bank and Vijaya bank.
2. To study the performance of BOB , Dena and Vijaya before merger.
3. To study the benefits of BOB merger with Dena bank and Vijaya bank.

5. Limitations Of The Study:

1. The study is related to Bank of Baroda merged with Dena bank and vijaya bank.
2. Consider only two years of Time Period
3. Data collection completely based on secondary data.

6. Research Methodology:
6.1 Data collection:
For this project, I used only secondary data and it is taken from different sources as follows
1. Websites
2. Magazines
3. Books.
4. Articles
6.2 Statistical Tools:
The following tools used to Analyse the Secondary data as follows:
1. Percentages: (Current year value-base year value) * 100/ (base year value)
2. Gross NPA Ratio: (Gross NPA * 100)/ Advances)
3. Net NPA Ratio:(Net NPA * 100)/ (Advances- provisions)

6.3 Graphical Representation:

To Represent the Processing Data, following graphs are used:

1. Column charts
 CHAPTER 2

REVIEW OF LITERATURE

P Akhil Bhan has made an attempt to study the insight into the motives and benefits of the
mergers in Indian banking sector .This is done by examining the eight merger deals of the banks
in India during the period of reforms from 1999 to 2006 . Through the empirical methods by
applying t-test and EVA value calculations the potential of the mergers has been evaluate to
study the efficiencies or benefits achieved due to the merger.Through this paper and the sample
taken for analysis it has been concluded that the mergers in the banking sector in the post reform
period possessed considerable gains which was justified by the EVA of the banks in the post
merger period.
Dr. V. K. Shobhana and Dr. N. Deepa (2011) made a probe into the fulfilment of motives as
vowed in the merger deals of the nine select merged banks. The study uses Summary Statistics,
Wilcoxon Matched Paired Signed Rank Test and‘t’ test for analysis and interpretation of data
pertaining to the five pre and post merger periods each. The result indicates that there has been
only partial fulfilment of the motives as envisaged in the merger deals.
Egl Duksait and Rima Tamosiunien (2009) described the most common motives for
companies decision to participate in mergers and acquisitions transactions. The reason is
growth, synergy, access to intangible assets, diversification, horizontal and vertical integration
and so on arises from the primary company’s motive to grow. Most of the motivations for
mergers and acquisitions feature serve as means of reshaping competitive advantage within their
respective industries. However, it may be that some of the motives identified affect some
industries more than others, and in that sense they can be expected to be associated with a greater
intensity of mergers and acquisitions in certain sectors rather than others.
Ms. Astha Dewan (2007) focused on the post merger financial performance of the acquirer
companies in India and performance of firms going through mergers in Indian industry. The
merger cases for the year 2003 have been taken for the analysis. The financial data has been
collected for six years from 2000-06. Pre-merger and post-merger financial ratios have been
examined using paired sample t test. The results of the analysis reveal that there is significant
difference between the financial performance of the companies before and after the merger.
Further, it has been found that the type of industry does seem to make a difference to the post-
merger operating performance of acquiring firms.
Mital Menapara et al evaluated the impact of mergers and acquisitions on financial
Performance of Indian Corporate Sectors and examined the impact of merger and acquisitions on
Return on Investment, Profitability and Liquidity position of selected companies. The authors
concluded that emerging from the point of view financial evaluation is that the merging
Companies were taken over by companies with reputed and good management. And therefore, it
was possible for the merged firms to turnaround successfully in due course.
Pramod Mantravadi & A Vidyadhar Reddy (2008) studied the impact of mergers on the
operating performance of acquiring corporates in different industries, by examining some pre-
merger and post-merger financial ratios, with the sample of firms chosen as all mergers
involving public limited and traded companies in India between 1991 and 2003. The results from
the analysis of pre- and post- merger operating performance ratios for the acquiring firms in
the sample showed that there was a differential impact of mergers, for different industry sectors
in India. Type of industry does seem to make a difference to the post-merger operating
performance of acquiring firms.
Jagdish R. Raiyani (2010) in her study investigated the extent to which mergers lead to
efficiency. The financial performance of the bank has been examined by analyzing data relevant
to the select indicators for five years before the merger and five years after the merger. It is
found that the private sector merged banks are dominating over the public sector merged banks
in profitability and liquidity but in case of capital adequacy, the results are contrary. Further, it
was observed that the private sector merged banks performed well as compared to the public
sector merged banks.
Rehana Kouser and Irum Saba (2011) explored the effects of merger on profitability of the
bank by using six different financial ratios. They have selected 10 commercial banks that faced
M&A during the period from 1999 to 2010. The lists of banks were selected from the Karachi
Stock Exchange (KSE). Quantitative data analysis techniques are used for inference.
Analysis was done by using paired t-test. The results recommend that operating financial
performance of all commercial bank’s M&A included in the sample from banking industry had
declined later. The results shows that there is a decline in all 6 ratios: profitability ratios, return
on net worth ratios, invested capital, and debt to equity ratios.
Dr. Neena Sinha et al (2010) in their study described the impact of mergers and acquisitions on
the financial efficiency of the selected financial institutions in India. The analysis consists of
two stages. Firstly, by using the ratio analysis approach, they calculated the change in the
position of the companies during the period 2000-2008. Secondly, they
examine changes in the efficiency of the companies during the pre and post merger periods by
using nonparametric Wilcoxon signed rank test. The result revealed a significant change in
the earnings of the shareholders, there is no significant change in liquidity position of the
firms. The result of the study indicate that M&A cases in India show a significant correlation
between financial performance and the M&A deal, in the long run, and the acquiring firms were
able to generate value.
Nisarg A Joshi and Jay M Desai in their study measured the operating performance and
shareholder value of acquiring companies and comparing their performance before and after
the merger. They used Operating Profit Margin, Gross Operating Margin, Net Profit Margin,
Return on Capital Employed, Return on Net Worth, Debt-Equity Ratio, and EPS P/E for
studying the impact. They concluded that as in previous studies, mergers do not improve
performance at least in the immediate short term.
Pramod Mantravadi, A.Vidyadhar Reddy (2007) in their research paper focussed on the
impact of mergers on the relative size and operating performance of acquiring corporates by
examining some pre- and post-merger financial ratios with a sample of firms chosen from all
mergers involving public limited and traded companies in India between 1991 and 2003. The
study used the following financial ratios: operating profit margin, gross profit margin, net profit
margin, return on net worth return on capital employed and debt-equity ratio .The results suggest
that there are minor variations in terms of the impact on operating performance following
mergers, when the acquiring and acquired firms are of different relative sizes, as measured by
market value of equity.
Julie Lei Zhu (2011) developed a new measure for shareholder value creation to assess the
efficiency of acquiring firms in utilizing capital before mergers and acquisitions (M&As)
and links this measure to acquirers’ post-acquisition performance. His measure, constructed
before the M&A transaction, (a) predicts both the operating and long-run abnormal stock
performance of merged firms after the acquisitions and (b) hedge portfolios based on the
measure generate substantial abnormal returns. Overall, the results indicated that investors do
not fully recognize how efficient acquirers have been in utilizing capital before M&As and
that incorporating the new value creation measure into the decision process of large-scale
M&As can help protect shareholder wealth.
Mehroz Nida Dilshad (2012) measured the efficiency of market with respect to
announcements of mergers and acquisitions using an event study methodology. The study
analyzed the effects of banks mergers and their announcements on the prices of stocks, in
Europe. Evidence here supports that significant cumulative abnormal returns were short lived for
the acquirers. At the end of the event window, the cumulative abnormal returns were 0. Evidence
of excess returns after the merger announcement was also observed along with the leakage of
information that resulted in the rise of stock prices few days before the announcement of
merger or acquisition. At the same time, the results of cumulative abnormal returns showed that
target banks earned abnormal returns on the merger announcement day.
A. Bashir et al (2011) investigated the performance record of forty five mergers and
acquisitions (M&A) that took place during 2004 to 2010 in various sectors of Pakistan using
event study methodology. They indicated that overall during eleven day window period neither
target nor acquirer firms created or destroyed value for shareholders. The wealth for the
shareholders of target and bidder firms is examined by estimating the cumulative abnormal
returns for an 11-day period surrounding the merger announcement. Their findings indicate
that overall during eleven day that of acquirer’s enjoy statistically insignificant increase in
value. Their findings are in disagreement to majority of studies in this area, which indicate the
gain to target shareholders while loss to acquired companies.
Annalisa Caruso and Fabrizio Palmucci analysed the market reaction to M&A in the
banking sector, particularly interesting because of the higher complexity of corporate governance
and the importance that the M&A activity has had in recent years in Europe, especially in Italy.
In this research they performed an event study on the Italian market (in the period 1994-2003)
with two main goals: first they observe if and when there is a positive value creation, and when
private benefits of control represent one of the drivers of the operations; secondly investigated
the determinants of their results, looking at the characteristics of the banks, regulation, the role of
minority shareholders and that of the Bank of Italy.
Mathieu Luypaert empirically investigated the industry determinants of shareholder value
creation in a sample of horizontal M&As in Europe during the period 1997–2006.The results
show that industry concentration, industry-level operating performance, and the ratio of
combined target and bidder size relative to the minimum efficient scale in the corresponding
industry are significantly negatively related to the total value creation in M&As. The
relation between industry sales growth and combined value creation is U-shaped. We also find
some evidence that the value creation in M&As is significantly higher in recently deregulated
industries. Finally, the data reveal that the distribution of M&A value between target and bidder
investors is determined by firm-level variables rather than by industry characteristics.
Dr. P. Natarajan and k. Kalaichelvan (2011) used the share price data and financial statements
of eight select public and private sector banks, during the period between 1995 and 2004, this
study examined M&A as a business strategy and to identify the relative importance of mergers
on business performance and increased Shareholders wealth. The study showed that in a
banking environment marked by frequent mergers, such transactions directly or indirectly
effects the shareholders sentiments and increase market share (i.e.) mergers enhances
performance and wealth for both the businesses and shareholders.
Jianyu Ma et al (2009) investigated abnormal returns to shareholders of bidder firms
around the day of M&A announcement for ten emerging Asian markets: China, India, Hong
Kong, Indonesia, Malaysia, the Philippines, Singapore, South Korea, Taiwan, and Thailand.
Using a sample of 1,477 M&A deals in the ten emerging Asian markets, It was found that the
stock markets have expected positive cumulative abnormal returns in three different event
windows: a two-day (0, 1) window, a three-day (-1, +1) window, and a five-day (-2, +2)
window. Valuation effects of information leakage about M&A deals are statistically significant.
The findings suggest that as investors reap the financial benefits associated with M&A deals,
external growth through M&A activity may be highly recommended to managers.
Panayiotis Liargovas and Spyridon Repousis (2011) examined the impact of Greek mergers
and acquisitions on the performance of the Greek Banking Sector during the period 1996-2009.
With the use of event study methodology, we reject the “semi-strong form” of Efficient
Market Hypothesis (EMH) of the Athens Stock Exchange. The overall results indicate that
bank mergers and acquisitions have no impact and do not create wealth. They also examined
operating performance of the Greek Banking Sector by estimating twenty financial ratios.
Findings show that operating performance does not improve, following mergers and acquisitions.
There are also controversial results when comparing merged to non-merged banks.
Ahmad Ismail, Ian Davidson & Regina Frank (2009) concentrated on European banks and
investigated post-merger operating performance and found that industry-adjusted mean cash flow
return did not significantly change after merger but stayed positive. Also find that low
profitability levels, conservative credit policies and good cost-efficiency status before merger are
the main determinants of industry-adjusted cash flow returns and provide the source for
improving these returns after merger. Results show that total factor productivity for merger
banks for the period after merging can be attributed to an increase in technical inefficiency and
the disappearance of economies of scale, while technical change remained unchanged compared
to the pre-merging level.
 CHAPTER 3
BANK OF BARODA PROFILE

3.1 Introduction of BANK OF BARODA:

Bank of Baroda is one among the foremost outstanding banks in Asian nation, having its total
assets as RS one,43,146 Crores as on thirty first March 2007.The bank was based by prince
Sayajiro Gaekwad three (also known ae Shrimant Gopalrao Gaekwad) , then prince of Baroda
on twentieth of July 1908 with a paid capital of RS ten lacs. From its introduction in an
exceedingly little building of Baroda, the bank has return an extended thanks to accomplish its
current position united of the foremost vital banks in Asian nation. On nineteenth of July 1969,
Bank of Baroda was nationalized by the govt of Asian nation with thirteen alternative industrial
banks.

The bank offers a good array of tailored and specialised repaired to fulfill the various desires of
its customers and these services have categorised into personal Banking, Business Banking,
company Banking, International Banking, Treasury Banking and Rural Banking Services.

DEFINITION OF BANK:

BANK DEFINITION:

A institution that's licenced to influence cash and its substitutes by acceptive time and demand
deposits, creating loans, finance in securities, The bank generates profits from th distinction
within the interest rates charged and paid.

MEANING OF BANK:

A bank could be a institution licenced by a government. Its primary activities embody borrowing
and disposal cash. In Japan, banks area unit sometimes the nexus of a cross-share holding entity
referred to as thezaibatsu. In France, scourge assurance is rife, as most banks provide insurance
services (and currently property services) to their shoppers.
HISTORY OF BANK OF BARODA:

1990s

 1990: BOB opened a OBU in Mauritius, however they closed its representative
workplace in state capital.
 1991: London branches of Union Bank of Asian nation and geographical region & Sind
Bank (P&S) were appropriated by BOB. P&S’s branch had been established before 1970
and Union Bank’s when 1980.
 1992: BOB was incorporated its operations in African country into an area subsidiary
with atiny low share of shares quoted on the national capital exchange.
 1993: BOB conjointly closed its OBU in Bahrain.
 1996: BOB entered the capital market in Gregorian calendar month with AN Initial
Public giving (IPO). the govt of Asian nation continues to be the biggest stockholder,
owing sixty six of the bank’s equity.
 1997: BOB conjointly opened a branch in metropolis.
 1998: BOB bought out its partners in IUB International Finance in port. Apparently this
was a response to regulative changes following Hong Kong’s reversion to the People’s
Republic of China. BOB conjointly nonheritable geographical region Cooperative Bank
in an exceedingly rescue.
 1999: BOB incorporated in Bareilly Corporation Bank in another rescue. At the time,
Bareilly had sixty four branches, together with four in Delhi.

In Guyana, BOB incorporated its branch as a subsidiary, Bank of Baroda South American
country.

BOB additional a branch in Mauritius, however closed its Harrow Branch in London.

2000s:

 2000: BOB established Bank of Baroda (Botswana).

 2002: BOB non heritable Benares banking company (BSB) at the depository financial
institution of India’s request. BSB was established in 1946 however derived its origins
back to 1871 and its operate as its operate because the treasury workplace of the Benares
 state. In 1964, BSB had nonheritable Bareilly Bank (est. 1934), with seven branches; it
conjointly had appropriated Lucknow Bank in 1968. The acquisition of BSB brought
BOB a hundred and five new branches.
 2002: Bank of Baroda (Uganda) was listed on the Uganda Securities Exchange (USE).
 2003: BOB opened AN OBU in urban center.
 2004: BOB nonheritable the unsuccessful Gujarat native space Bank, and came back to
Tanzania by establishing a subsidiary in Dar-es-Salaam. BOB conjointly opened a
representative workplace every in Kuala Lumpur, Malaysia, and state, China.
 2005: BOB engineered a worldwide information Center (DC) in urban center for running
its centralized banking answer (CBS) and alternative applications in additional than 1900
branches across Asian nation and 20 alternative counties wherever the bank operates.
BOB conjointly opened a representative workplace in Asian nation.
 2006: BOB established in Offshore Banking Unit (OBU) in Singapore.
 2007: BOB’s total business crossed 2.09 trillion (short scale), its branches crossed 2000,
and its international client base twenty nine million folks.
 2008: BOB opened a branch in Canton, China and in Kenton, Harrow uk. BOB
conjointly opened a venture insurance company with Andhra Bank.
 2009: BOB conjointly registered in 2017 and it's three branches, 2 in metropolis, one in
Wellington.

OVERVIEW OF BANK OF BARODA:

On 1st April ,2019 for the first time in India 3 Nationalised Banks i.e. Dena Bank and Vijaya
Bank, have merged with Bank of Baroda. Bank of Baroda is now the second largest Nationalised
Bank in India. They are worth Rs.15 lakh crores. Bank of Baroda now has 9500 branches in
India. Their branches in Northeast India, South India and Western India have grown a lot. Due to
Dena Bank and Vijaya Bank merger with Bank of Baroda, some branches are facing financial
problems, some of the branches be will shut down. All over India, Bank of Baroda has 13,400
ATMs. They have more than 85,000 employees. The bank provides services to 12 crores
customers. In Bank of Baroda’s zonal office in Bengaluru General Manager Birender Kumar said
that, customer will experience better banking services because of the merger. Bank of Baroda
will provide customers cash management solutions, Investment advice, financial planning etc.
On 26th December 2018, employees of Dena Bank and Vijaya Bank went on a strike. The bank
unions said that employees went on strike because many branches would shut down due to the
merger. This would make banking very difficult for customers. Bank of Baroda has promised
that all the employees and customer problems, will be solved within one and a half years. Bank
of Baroda said that employees will benefit from this merger

3.1.2 Subsidiaries of BANK OF BARODA:

BOB Capital Markets (BOBCAPS) is a SEBI-registered investment banking company based in

Mumbai, Maharashtra. It is a completely closely-held subsidiary of Bank of Baroda. Its monetary
services portfolio includes initial public offerings, private placement of debts, corporate
restructuring, business valuation, mergers and acquisition, project appraisal, loan syndication,
institutional equity research, and brokerage.

Bob cards Ltd may be a mastercard company, 100% subsidiary of Bank of Baroda. The company
is within the business of Credit cards, Acquiring Business & back end support for Debit cards
operations to Bank of Baroda. Bank of Baroda had introduced its 1st charged card named
BOBCARD within the year 1984. The whole operation of this plastic card was managed by
mastercard division of Bank of Baroda. It established a completely closely-held subsidiary,
Bobcards Limited in the year 1994 to cater to the need of rapidly growing credit card industry in
a focused manner. BOBCARDS Ltd is that the 1st Non-banking company in Asian country
issuance credit cards.

The Nainital Bank Ltd. was established within the year 1922 with the target to cater banking
desires of the individuals of the region. In the year 1973, Reserve Bank of India directed Bank of
Baroda, to manage the affairs of the Nainital Bank Limited.

3.1.2 Awards And Rewards:

• Best Public Sector Bank Award under the category of Global Business at the Dun &
Bradstreet Banking Awards 2015.

• The Government of India awarded Bank with the 1st Prize in the Indira Gandhi
Rajbhasha Shield
Competition in Region 'B'. on Hindi Diwas 2014. Further, Bank was awarded 1st prize for 'B'
Region and second prizes for Region 'A' and 'B' by banking company of Asian country (RBI)
underneath the tally Rajbhasha defend Competition.

• BML Munjal award in Public Sector Category for Business Excellence Through Learning
& Development –2015.

• Excellence in Banking (PSU Sector) at the 5th My FM Stars of the Industry Awards
recently held in Mumbai on 30.01.2015.

• National Prize – First Rank in Innovative Training Practices for the year 2014 from
―Indian Society for Training and Development‖ (ISTD).

• Golden Peacock National Training Award for the year 2014 under the aegis of Institute of
Directors, New Delhi.

• Champion of Champions Award at the 54th annual ABCI Awards 2015, for 6 Categories-
Indian.

Language Publication – Bronze; Exhibition Collateral – Gold; Wall Calendar 2014 – Silver;
Environmental Communication – Silver; E-Zine – Bronze; company Film – Gold.

• 3 Awards at the IBA Banking Technology Awards 2014 – 15, Winner in Best Financial
Inclusion.

3.1.3 Recent Developments:

• Bank of Baroda acquired the semi naming rights of Sikanderpur Metro Station in
Gurugram. This is the primary time that a public sector bank has bagged the naming right of a
railway system station. They followed a similar approach with Mumbai Metro where Andheri
metro station has been named as Bank of Baroda Andheri

• Bank of Baroda sealed a 3-year principal sponsorship contract with Olympics 2016
Women's badminton Silver medalist PV Sindhu and India's No 1 ranked Men's Badminton
player K Srikanth.
• Bank of Baroda became the first National Supporter (Indian sponsor) of the FIFA U-17
World Cup India 2017, the first football World Cup to be hosted in India.

• After the merger of Dena bank and Vijaya Bank with Bank of Baroda effective April 1, 2019 it
has become the India's third largest lender behind SBI and ICICI bank.

Table no 1. Equity shares of bank of baroda:

% Share
Holder's Name No of Shares Holding

Promoters 2663180112 69.23%

N Banks Mutual
Funds 427834787 11.12%

Foreign
Institutions 245248483 6.38%

General Public 214303926 5.57%

Financial
Institutions 180726528 4.7%

Others 115433520 3%

The Equity shares of BOB are listed on the Bombay Stock Exchange, where it is a constituent of
the BSE SENSEX index, and the National Stock Exchange of India, where it is a constituent of
the CNX Nifty. Its world repository Receipts (GDRs) ar listed on the London securities market.

3.1.4 Recent Issues:

On the 4 September 2017 the South Africa Financial Intelligence Centre fined Bank of Baroda ₹
11 million (equivalent to US$837,000) by for flouting anti-corruption laws in transactions on
accounts owned by the Gupta family. Following the flagging of 36 suspicious transactions
through Gupta-family-owned accounts over a ten-month period valued at ₹4.2 billion, the bank
tried to close the accounts. The Gupta family has filed an interdict against the bank to prevent it
from closing their accounts. During February 2018, it had been declared that the Bank of Baroda
has given notification to the South African banking company that it'll be exiting the country.

Mission Of BANK OF BARODA:

To be a top ranking National Bank of International Standards, committed to augmenting stake

holders' value through concern, care and competence.

Table No 2: List of Directors on the Central Board members of bank of baroda

S no Name Designation

1 Hasmukh Adhia Chairman

2 Papia Sengupta Executive Director
3 Vikramaditya Singh Khichi Executive Director
4 Bharatkumar D Dangar Director
5 Ajay Kumar Director
6 Debashish Panda Director
7 P S Jayakumar Managing Director & CEO
8 Shanti Lal Jain Executive Director
9 Srinivasan Sridhar Director
10 Gopal Krishan Agarwal Director
11 Soundara Kumar Director
3.2BOB merged with dena bank and vijaya bank:

1. Dena bank.
2. Vijaya bank.

3.2.1Dena bank:

Dena Bank Ltd was AN Indian public sector bank. It was headquartered in city and had one,874
branches. The bank was supported in 1938 and therefore the Indian government nationalized it in
1969.
On seventeen September 2018, the Government of India proposed the amalgamation of Dena
Bank and Vijaya Bank with the Bank of Baroda, pending approval from the boards of the three
banks. The Union cupboard and therefore the boards of the banks approved the merger on a pair
of Gregorian calendar month 2019. Under the terms of the amalgamation, Dena Bank and Vijaya
Bank shareholders received 110 and 402 equity shares of the Bank of Baroda, respectively, of
face value ₹2 for every 1,000 shares they held. The amalgamation became effective from 1 April
2019.

History:

Dena Bank was founded on 26 May 1938 by the family of Devkaran Nanjee, under the name
Devkaran Nanjee Banking Company. It adopted its new name, Dena (Devkaran Nanjee) Bank,
when it was incorporated as a public company in December 1939.

In July 1969 the Government of India nationalized Dena Bank, along with thirteen other major
banks. Dena Bank thereby became a Public Sector bank constituted under the Banking
Companies (Acquisition & Transfer of Undertakings) Act, 1970. Under the provisions of the
Banking Regulations Act 1949, in addition to the business of banking, a bank can undertake
other businesses as specified in Section 6 of the Banking Regulations Act, 1949.

3.2.2Vijaya bank:

Vijaya Bank was a public sector bank with its corporate office in Bengaluru, Karnataka, India. It
was one of the nationalized banks in India. The bank offered a wide range of financial products
and services to customers through its various delivery channels. The bank had a network of 2031
branches (as of March 2017) throughout the country and over 4000 customer touch points
including 2001 ATMs.

On 17 September 2018, the Government of India proposed the merger of Vijaya Bank and Dena
Bank with the Bank of Baroda, pending approval from the boards of the three banks. The merger
was approved by the Union Cabinet and the boards of the banks on 2 January 2019. Under the
terms of the merger, Dena Bank and Vijaya Bank shareholders received 110 and 402 equity
shares of the Bank of Baroda, respectively, of face value ₹2 for every 1,000 shares they held.
The merger is effective from 1 April 2019.

History:

Vijaya Bank was established by a group of farmers led by A. B. Shetty on 23 October 1931 in
Mangaluru in Dakshina KannadaDistrict of Karnataka State. Since it was established on
Vijayadashami Day, it was named 'Vijaya Bank'.

During the economic chaos created out of the Great Depression of 1927–30, Shetty approached
leading Bunt personalities to start a bank with the objective of extending credit facilities at a
lower rate of interest to enable the farmers to cultivate their lands and prevent them from falling
into the clutches of money lenders. Accordingly, Shetty involved 14 Bunts and established
Vijaya Bank on 23 October 1931. In the beginning the bank had an authorized capital of ₹5 lakh
and an issued capital of ₹2 lakh. The paid up capital was ₹8,670.

3.3Challenges Of Merger:

1. Integration of technology platforms and cultures of these organizations.

2. Aligning the distribution of professionals in the merged bank and handling of human
resources.

3. As issues on seniority are structured and important in a public sector set-up, ensuring that
there is harmony would be a challenge.

4. Rationalization of physical infrastructure.

5. Dena Bank came under prompt corrective action of the RBI in May 2017 in view of high Net
NPA and negative RoA (return on assets).

6. Bank of Baroda is the largest among the three and will take a hit on its asset quality.

7. The other challenge is customer retention which we saw in SBI’s recent merger with its
associate banks.
8. The quantum of Gross NPA (GNPA) cannot change and will still have to be addressed.

9. Mergers are not the panacea in the context of PSBs.

 REASONS FOR MERGING:

• Currently, Dena Bank is restrained from lending any further as it is under PCA (Prompt
Corrective Action) and the other two banks have the strength to subsume a weaker bank.

• Dena Bank has a gross NPA ratio of 22%, among the highest across the industry. While Bank
of Baroda, the largest of the three, has a bad loan ratio of 12.4% and Vijaya Bank, on the
contrary, is among the better performing public sector banks with a gross NPA ratio of 6.9%.

• One of the main reason for merging the banks is to tackle the issue of mounting bad loans. Bad
loans refer to loans where corporate borrowers are not re-paying their dues to banks.

• Another reason behind the choice of these banks was due to the fact that all three use the same
core banking system, 'Finical' from Infosys which will ease the merger of the technology
platforms and back-ends smoothly.

• The merger will make the banks stronger and sustainable as well as increase their lending
ability.

• Also, this merger is expected to cater to the issue of reducing demand of fresh loans in the
economy.

• Finance Minister Arun Jaitley stated that bank lending was becoming weak and in turn was
hurting corporate sector investments. Also, many banks were in a fragile condition due to
excessive lending and ballooning NPAs.

1. The number of public sector banks are very high:

Before 2014 the number of public sector banks are 27.that is 19 banks which are
exclusively owned by government of India that is nationalized banks. A part From that
we have 1 State Bank of India, 5 associate banks of SBI,1 IDBI, and another entity was 1
Bharathiya Mahila bank. So put together there are 27 public sector banks. Whichever
angle u look at it the number of public sector banks are very high. All these are majorly
owned by government of India and these are basically fighting to acquire the same
customers. The main objective is to reduce the number of public sector banks and one of
 the way the government of India is trying to do now is to promote consolidation by
merger of amalgamation. And the other way which already the government of India is
tried is privatization. So basically the idea is what the number of public sector banks is
very high you need to reduce the number of public sector banks.
2. Recapitalization need will come down:
The requirement in terms of recapitalization for government of India is also increasing. In
the year 2014 the government of India announced that they will provide a recapitalization
of around ₹ 70,000 cr but in a span of 5 years that is through budgetary allocation. In the
first two years they allocated 25,000 cr and in the next two years they allocated ₹
10,000 cr . So basically government of India said they will provide recapitalization till
2019. But over a period of time the government of India is realised that this amount of
₹70,000 cr is not sufficient for the banking sector. As a result of this last year itself the
government of India has extended this particular idea of recapitalization from ₹70,000 cr
to more than ₹ 2.1 lakh cr but having said so all of u must be knowing this the concept of
recapitalisation package is just accurate measure.This will not prevent the creation of
NPA’s and as per financial stability report of RBI. The NPA’s in banking sector are
going to increase in the financial year 2019. As per this particular report in the financial
year 2018 the NPA’s is 11.6% and in the financial year 2019 they may increase to 12.2%
of total loans issued by the banking sector. And the same report also mix one more
concerning point that is if the situation goes beyond control rather than limiting to 12.2%
the NPA’s may actually increase to 13.3% . So basically as NPA’s keeps on increasing
the burden or the pressure on the government of India to maintain the financial stability
in the public sector banks will also increase. So there by what if this particular banks are
either privatised or merged the pressure on the government of India to provide
recapitalisation will automatically come down. So that is the second reason why this kind
of merger is required.
3. Regulatory burden will come down:
It is becoming burned for RBI to regulate all the participants in the banking sector. On
one side RBI has to regulate differentiated banks, RBI has to regulate regional rural
banks, RBI has to regulate scheduled commercial banks which are private sector banks as
well as public sector banks. Since the number of banking units have kept on increasing
 the burden to regulate also has increased on the shoulders of RBI. So What if the number
of banks under the public sector banks are reduced the burden on the shoulders of RBI
will also come down. So regulatory burden on RBI also will come down.
4. The NPA’s are very high:
The most important concern for the banking sector presently is non performing assets.
The burden of non performing assets are very high. The NPA’s as already mentioned will
continue to increase even in this particular financial year and when the NPA’s increases
the burden on RBI the burden on the government of India as well as the pressure on
banks themselves will also increase. So basically if the public sector banks are reduced
by the concept of either privatisation or mergers. The banks can use economies of scale
but essentially the banks will able to use economies of scale the assets will be pulled in
NPA’s to certain extent can be controlled.
5. Recommendation of Narasimhan committee:
As already mentioned this is the recommendation of Narasimhan committee 1991 that is
to have three tire structure with in which this is The nationalised banks it should be in the
range of 8 or 6-8 to be presides. So these are some of the reasons why the merger is
required in the present context.

MERGED ENTITY:
BANKS TOTAL DEPOSITS EMPLOYEES NET NPA CASA
BUSINESS ( RS cr) ( RS cr) (%) RATIO
(RS cr) (%)
Bank of 1,09,810 5,81,485 56,360 5.4 35.52
Baroda
Vijaya 2,79,575 1,57,325 15,875 4.1 24.91
Bank
Dena Bank 1,72,940 1,03,020 13,440 11.04 39.8
Merged 1,482,325 8,41,830 85,675 5.71 34.06
Entity
 The government says two strong banks that is Vijaya bank as well as Bank of Baroda will
be merged with the weaker bank that is Dena bank. Now what are the numbers relate to
these particular deals. The merged entity or the new entity the total business will be around
1,482,325 lakh cr and as the result of this merger this particular bank or the new entity
which will be created will be the 3rd largest bank in India. The top most of the biggest bank
in case of India is SBI, second largest is HDFC and this will become the third largest. Once
the merger happens this will become the third largest bank in India and second largest
public sector bank. Earlier SBI was the largest bank as well as the largest public sector
bank and the second largest public sector bank was Punjab national bank. And since the
merger or the new entity will be created by merging Dena bank, Bank of Baroda as well as
Vijaya bank. The value of this particular bank or the business of this particular bank will be
much higher than Punjab national bank. Hence this will become the second largest public
sector bank and third largest bank in India.
1. So one is total business second one is deposits after the merger happens the total value of
deposits of all the three banks will be more than 8,41,830 lakh cr .
2. Third one is the number of employees after the merged entity the total number of
employees will be more than 85,675 this will be one of the biggest concern of the new
entity.
3. Net NPA is going to come down to 5.71% why the Bank of Baroda because of its
prudent asset quality recognition measures has very less NPA’s that is 5.4%, Vijaya bank
has much lesser than this that is 4.1% we’re as Dena bank the NPA is around 11.04% and
Dena bank is the weakest of all the three banks and in this year itself Dena bank has been
put under the prompt corrective action (PCA) which is one of the measures to control
NPA’s which has been implemented by RBI. In the month of March RBI has directed
Dena bank not to issue any kind of credit in the market. So the two banks will be
subsuming the NPA’s of Dena bank or the troubles of Dena bank. As a result of which
NPA’s of merged entity will be 5.71.
4. CASA ratio it basically stands for Current Account as well as Savings Account. A bank
will collect deposits in multiple forms but the cheaper source of borrowing by a bank is
through current accounts and savings account. Hence if the CASA ratio is very high that
is out of total deposits current accounts as well as savings accounts are very high for a
bank. Then it is borrowed at a cheaper rate. Hence a higher CASA ratio is considered to
be a favourable for a bank. So CASA ratio is favourable for Bank of Baroda and Dena
bank. All though it is slightly on Vijaya bank. The merged entity or the new entity will
have a CASA ratio of 34.06 which is considered to be a very good feature for a new
entity.

With the Union cupboard approving one in every of the primary three-party mergers
within the public banking sector on Jan a pair of, 2019, Bank of Baroda can become the
third largest loaner in the country and second largest public-sector bank.

The merger of Vijaya Bank and Dena Bank into Bank of Baroda is planned to be
effective from Apr one, 2019. The uniting emphasises on consolidating and group action
smaller banks with larger banks. The tripartite amalgamation reflects the government's
focus towards consolidation and strengthening of public-sector banking and also to deal
with the raising problematic issues like non-performing assets (NPAs) and default of
loans.
The amalgamation will be made effective by way of share swapping pursuant to which
Bank of Baroda will issue shares to the existing shareholders of Vijaya Bank and Dena
Bank. As per the share exchange ratio approved in relation to the merger, the Bank of
Baroda will issue 110 shares of Rs 2 each for every 1000 shares of Dena Bank and 402
shares of Rs a pair of every for each a thousand shares of Vijaya Bank.
Although there square measure reports of the share swap magnitude relation being not up
to the magnitude relation that was earlier anticipated by the shareholders of the merging
banks, it appears that this move, in the long run, will only strengthen the banking industry
and will give the required boost to the public banking sector.
The primary objective of this amalgamation is aimed at improving the customer base,
consolidating the public-sector banking and enabling the merged entity to compete at
global banking level.
Further, such massive consolidation is also expected to reduce the lending cost, the
number of NPAs and increase the merged bank's operational stability and profitability.
The central government had, previously in 2017 as well, merged six banks into State
Bank of India, making it the largest banking conglomerate.
Post-consolidation, Bank of Baroda will have business of around Rs 15.4 trillion and
advances and deposits market share of 6.9% and 7.4%, respectively. Further, considering
the regional widespread presence of Vijaya Banka and Dena Bank, the Bank of Baroda
will have pan India presence.
Amongst all the highlights, the deal is also likely to face certain hurdles in relation to its
implementation process, employee retention etc.
Continuity of workers has perpetually been an important issue at the time of structuring
likewise as implementation of a merger. In the gift case, post-merger, Bank of Baroda
shall become an employer of over 90,000 employees working across 9,500 branches
throughout the country.
Further, it will also have to integrate data of more than 100 million customers as well.
With such mammoth task at hand, the implementation phase of the merger may pose, for
some, initial teething issues for the merged bank and the government.
Further, multiple nation-wide strikes have been organised by bank employee associations
such as All India Bank Officers' Confederation (AIBOC), All India Bank Employees
Association (AIBEA), Bank Employees Federation of India (BEFI).
A writ petition is also pending with the Delhi high court, challenging the merger and
alleging violations of banking regulations.
Amidst such oppositions, the Finance Minister and have recently asserted that pursuant to
the merger, there will be no retrenchment and there will be no impact on the service
conditions of the employees as well.
The sporadic strikes are not only affecting the smooth operational functioning of the
banks but are also impacting other industries as well. However, in light of the
government's assurances, the fate of such oppositions need to be seen.
This uniting can gift Bank of Baroda because the world conglomerate within the banking
sector progressing to bring home the bacon the upper operating potency, money stability
and wider operationality.
It will not only facilitate national and global outreach but will also integrate public
banking sector in India. Having said that, realisation of such aim -- the success and the
efficacy of the consolidation will largely be contingent on the effective and smooth
implementation of the merger.
 4.1.DATA ANALYSIS

BANK OF BARODA:

2018 2017 2016 2015 2014

net profits -2431.81 1383.14 -5395.54 3398.44 4541.08

EPS -9.71 6 -23.89 15.83 107.38

total
assets/liabilities 719999.77 694875.41 671376.48 714988.55 659504.53

INTERPRETATION:
 In the above table the net profit is high in 2014 later it increased to 3398.44 in 2015 later
it is decreased to -5395.54 in 2106 again it slightly increased to 1383.14 in 2017 and
then decreased to -2431.81 in 2018.
 EPS is high in 2014 again it slightly increased to 15.83 in 2015 and again it slightly
decreased to -23.89 in 2016 later it is increased to 6.00 in 2017 and later it is decreased to
-9.71 in 2018.
 Total assets or liabilities are low in 2014 it slowly increased in 2015 again it decreased in
2016 later it increased in 2017 and then increased in 2018 also.

800000
700000
600000
total
500000 assets/liabilities
400000 EPS
300000
net profits
200000
100000
0
2018 2017 2016 2015 2014
-100000
DENA BANK:

2018 2017 2016 2015 2014

net profits -1923.15 -863.62 -935.32 265.48 551.66

EPS -18.06 -11.89 -15.5 4.94 14.4

total
assets/liabilities 120859.79 129530.52 133441.64 129920.55 124863.49

INTERPRETATION:
 In the above table the net profit is high in 2014 later it decreased to 265.48 in 2015 later it
is decreased to -935.32 in 2106 again it slightly decreased to -863.62 in 2017 and then
decreased to -1923.15 in 2018.
 EPS is high in 2014 again it slightly decreased to 4.94 in 2015 and again it slightly
decreased to -15.5 in 2016 later it is decreased to -11.89 in 2017 and later it is decreased
to -18.06 in 2018.
 Total assets or liabilities are low in 2014 it slowly increased in 2015 again it increased in
2016 later it decreased in 2017 and then decreased in 2018 also.

140000

120000

100000
total
80000 assets/liabilities
EPS
60000

40000 net profits

20000

0
2018 2017 2016 2015 2014
-20000
VIJAYA BANK:

2018 2017 2016 2015 2014

net profits 727.02 750.49 381.8 439.41 415.91

EPS 6.83 7.57 4.44 5.11 7.64

total
assets/liabilities 1176841.54 154051.11 144534.88 142406.56 137109.62

INTERPRETATION:
 In the above table the net profit is high in 2014 later it increased to 439.41 in 2015 later it
is decreased to 381.8 in 2106 again it slightly increased to 750.49 in 2017 and then
decreased to 727.02 in 2018.
 EPS is high in 2014 again it slightly decreased to 5.11 in 2015 and again it slightly
decreased to 4.44 in 2016 later it is increased to 7.57 in 2017 and later it is decreased to
6.83 in 2018.
 Total assets or liabilities are low in 2014 it slowly increased in 2015 again it increased in
2016 later it increased in 2017 and then decreased in 2018 also.

1400000

1200000

1000000 total
assets/liabilities
800000
EPS
600000

400000 net profits

200000

0
2018 2017 2016 2015 2014
3.3 Benefits of merger:
1) As the three nationalized banks, Bank of Baroda NSE -0.12% Dena
Bank and Vijaya Bank merged to form the second largest public sector bank in
the country, the unified management Monday said it would benefit customers, as
well as employees in a big way.
2) Vijaya Bank was founded in Karnataka's Dakshina Kannada district in 1931 by A
B Shetty.
3) Dena Bank, named after its founder Devkaran Nanjee, came into being in 1938 in
Mumbai.
4) The consolidated bank, which went into effect from Monday, will be the second
largest public sector bank in the country having wider geographical reach with
9,500 plus branches, the bank officials said.
5) It would have more than 13,400 Automated Teller Machines and above 85,000
employees to serve over 120 million customers, said the officials at a press
conference here to share details about the merger.
6) "The 120+ million customers will experience superior banking services and
benefit from wider product range including cash management solution, supply
chain financing, financial planning, wealth management," said Birendra Kumar,
general manager of Bank of Baroda zonal office here.
7) Kumar added that the employees will benefit from the diverse opportunities.
8) "The service conditions of the employees will not be impacted and the interests
of employees will be fully protected.
9) The best of HR practices adopted by each of the banks will be examined for
adoption," Kumar said.
10) Bank of Baroda was established in July 20, 1908 in erstwhile Baroda, now
known as Vadodara in Gujarat.
Dena Bank, Vijaya Bank and Bank of Baroda merger: Continuing its merger plan for public
sector banks, the government has finally completed the mega-merger of one weaker lender Dena
Bank and anchor lender Vijaya Bank with a 111-year-old Bank of Baroda (BoB). All these banks
are different from each other, have different business operations, hold different positions and
have different experiences. This would be second biggest merger plan of centre, after largest
lender State Bank of India (SBI) acquisition with its own six associated banks. Dena Bank and
Vijaya Bank on their official website stated that the process of amalgamation promises to
leverage the specific skills of each bank and imbibe their best practices. This mega entity has the
ability to do more and reach further to fulfil customers with world-class offerings backed by
robust processes.

While there won’t be much material change in BoB considering it is the acquirer, the
implementation of taking under Vijaya Bank and Dena Bank will be something to watch for.
That said, even customers of Vijaya Bank and Dena Bank will see changes in their way of
carrying a financial transaction. But for your information as a customer, you will be beneficial
from this merger as well. Here’s how!

According to Dena Bank and Vijaya Bank, the customer will become a part of the larger
organization or Bank, named Bank of Baroda. The new entity will have an increased market
share, which will help improve economies of scale and become more profitable. The customers
of each Bank will benefit by way of a larger number of branch and ATM network, have access
credit facilities and a wider array of products and services.

The combined entity has a network of close to 9500 branches, approximately 13000 ATMs
across India. (Vijaya Bank - ATMs approx 2000 & Branches approx 2050 , Dena Bank - ATMs
approx 1500 & branches approx 1850) .

Currently, BoB has around 5500 branches in India and 104 branches in overseas locations.
Vijaya Bank has approximately 2050 branches and Dena Bank has around 1850 branches in
India.
Further, a customer can also choose from a broader suite of products & services. Any merger or
amalgamation of one or more banks provides a broader geographic footprint and helps derive the
benefit of size, scale, strength.

This would be now the second largest public sector Bank in the country and third largest bank
after State Bank of India and ICICI Bank.

Hence, now the customers will enjoy first a financial operation with a strong bank and more
secured bank. Secondly, they will also have a larger footprint in services like ATM, digital
transaction services. Apart from this, a customer will also have more benefits that are currently
offered by BoB, but was not available in Dena and Vijaya.

Number of public sector banks will come down:

By 2014 there are 27 public sector banks and presently the number has been dragged
down to 21 and with this particular merger this will further come down to 19. The
problem with the present structure of the public sector banks is these public sector banks
account for more than 90% of the total NPA’s in the banking sector and this is the very
huge disadvantage or huge burden on the public sector banks. As the NPA’s keeps
increasing the financials of the banking sector will be effected. The credit dispersal or the
loans given by the banking sector will be effected not to forget the invested confidence
on these particular banks will also get shattered and more important higher the NPA’s it
will have a limiting effect on the growth prospects of Indian economy. So basically the
government of India is promoting this idea for merger which will to certain extent have a
limitation on the NPA’s. So basically the number will come down and second very
recently we have seen that having 21 number of public sector banks 19 public sector
banks are under losses. So basically through the idea of merger a weaker bank has been
merged with a stronger bank or two stronger banks. This will lead to transfer of NPA’s or
this particular weaker bank not existent in the banking sector. So the weaker banks
number will come down.
Regulatory pressure will come down:
 It is becoming burned for RBI to regulate all the participants in the banking sector. On
one side RBI has to regulate differentiated banks, RBI has to regulate regional rural
banks, RBI has to regulate scheduled commercial banks which are private sector banks as
well as public sector banks. Since the number of banking units have kept on increasing
the burden to regulate also has increased on the shoulders of RBI. So What if the number
of banks under the public sector banks are reduced the burden on the shoulders of RBI
will also come down. So regulatory burden on RBI also will come down.
Recapitalisation burden will come down:
The requirement in terms of recapitalisation for government of India is also increasing. In
the year 2014 the government of India announced that they will provide a recapitalisation
of around ₹ 70,000 cr but in a span of 5 years that is through budgetary allocation. In the
first two years they allocated 25,000 cr and in the next two years they allocated ₹
10,000 cr . So basically government of India said they will provide recapitalisation till
2019. But over a period of time the government of India is realised that this amount of
₹70,000 cr is not sufficient for the banking sector. As a result of this last year itself the
government of India has extended this particular idea of recapitalisation from ₹70,000 cr
to more than ₹ 2.1 lakh cr but having said so all of u must be knowing this the concept of
recapitalisation package is just accurate measure.This will not prevent the creation of
NPA’s and as per financial stability report of RBI. The NPA’s in banking sector are
going to increase in the financial year 2019. As per this particular report in the financial
year 2018 the NPA’s is 11.6% and in the financial year 2019 they may increase to 12.2%
of total loans issued by the banking sector. And the same report also mix one more
concerning point that is if the situation goes beyond control rather than limiting to 12.2%
the NPA’s may actually increase to 13.3% . So basically as NPA’s keeps on increasing
the burden or the pressure on the government of India to maintain the financial stability
in the public sector banks will also increase. So there by what if this particular banks are
either privatised or merged the pressure on the government of India to provide
recapitalisation will automatically come down. So that is the second reason why this kind
of merger is required.
The penetration/ reach of these banks will increase:
 It has been seen that all the three banks Vijaya bank is more dominant or more present in
southern India where as Dena bank and Bank of Baroda are more present in the western
India. Now basically when merging these three entries the penetration of the new entity is
going to increase across India. And more importantly Bank of Baroda is considered to be
more dominant in terms of FOREX earnings as well as technology driven tools. These
tools as well as the earnings in FOREX will benefit the new entity. So basically this type
of merger will promote penetration or reach of these particular banks.
Dena bank will be pulled out of problem:
As Dena bank is a weak bank. The NPA’s of Dena bank very recently reported were 22%
of total loans given by bank and it was put in prompt corrective action and RBI has
basically stated that Dena bank will not be allowed to lend in the market. So what we
have done is take Dena bank merger it with the strong banks such as Vijaya bank and
Bank of Baroda. As a result of this Dena bank will be pulled out of this particular
problem of very high NPA’s. The NPA’s of Dena bank were the 5th largest in terms of
the banking sector.

Indicator of things to come:

It is a very good indicator of things to come in case of a banking sector in India. In this
year itself government has taken two measures 1) privatisation 2) merger or
amalgamation of these particular banks. In this year alone government of India has
privatised and now has proposed amalgamation or merger of three public sector banks.
Hence it’s a very good indicator that even in the coming years government of India will
be taking these kind of initiatives were in they are going to promote more and more
efficiency in the banking sector.