The Union government on Monday cleared the long-pending proposal to merge PSU (public sector units) banks- Dena Bank, Bank of Baroda and Vijaya Bank. The move was made to handle the mounting non-performing assets (NPAs) with these financial institutions.
Finance Minister Arun Jaitley said while addressing the media briefing that the decision was taken carefully by choosing two strong banks to merge with a weak one. It was further informed that the combined entity will now become the third largest bank in the country.
Employees of the banks
The finance minister said during the meet that the employees of all the three banks will not face any adverse service conditions different from their present state and the interest of all the employees will be protected.
The existing employees will now be absorbed into the newly merged entity that will be formed (it is expected to take 4 to 6 months to complete the merger process).
Customers of the banks
Last year, SBI's (State Bank of India) five associate banks (State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore) and Bharatiya Mahila Bank were merged with SBI (the stronger entity), all collectively now known as SBI. So now all the customers of Bharatiya Mahila Bank automatically became SBI customers.
Similarly, suppose the new merged entity will be called ABC Bank, the existing customers of BoB, Dena Bank and Vijaya Bank will automatically become the customers of ABC Bank after the merger is done.
What happens to your bank account after the merger?
- Your account will not be closed, and you will not lose money. It will just become a bank account of the new entity.
- Once the merger is completed, your bank will inform you about the cheque books, passbook, card, etc changes. This will all be free of cost. They will include the new codes, logos, and the name of the bank. You will also be given enough time to change them and in the meantime, you can continue to use the existing cards and chequebooks, they are definitely valid.
- Some branches may close. This depends on the reach of the banks, that is if there is a Dena bank branch and a Bank of Baroda branch in the same area, one may be closed.
- Your fixed deposits or other kinds of deposits will remain safe and earn the interest you were supposed to till the time of maturity.
- Savings accounts will earn the interest that will be offered by the newly formed bank.
- The new entity will also have a new internet banking portal. During the initial time soon after the merger (transitional phase), your bank's existing link will be redirected to the new one.
- The IFSC and MICR codes of the branches used in online transactions will also be changed over time and duly informed to you. You will have to change the details of any automated ECS transactions like EMI transactions in the later phase.
- All the loan rates and terms and conditions associated with the existing loan will remain unchanged.
Note that the bank and the government (since these as public sector banks) will ensure that the least amount of inconvenience is caused to the consumers. Additionally, mergers will widen the reach of the bank formed and the services provided would be superior. Know that you will not lose your money and there is no need for you to close the account or make deposit withdrawals.