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Dena bank, Vijaya bank merges with bank of Baroda

In News:
Bank of Baroda (BoB) became the second largest state-owned lender after merging Dena Bank and Vijaya Bank into
itself as part of the first three-way amalgamation.
In Brief:
Historical Background of Bank Consolidation in India:
After the wave of economic liberalization, a committee under the chairmanship of Maidavolu Narasimham
(13thGovernor of Reserve Bank of India (RBI) was constituted in 1991 and again in 1998 to recommend reforms
required in banking sector.
Narsimhan Committee 1991 Recommendation:
Structural Reorganizations of the Banking sector :

  • Actual numbers of public sector banks need to be reduced
  • Recommended mergers to form a three-tier structure
  • Three to four big banks including SBI should be developed as international banks
  • Eight to ten banks having nationwide presence should concentrate on the national and universal banking services.
  • A large number of Regional Banks focusing on agriculture and rural financing.
  • No further nationalization
  • Liberal entry norms for private and foreign banks

Narsimhan Committee 1998 Recommendation:
Strengthening Banks in India: It recommended the merger of strong banks which will have ‘multiplier effect’ on the

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