NEW DELHI: Industry body Ficci Monday termed the government's decision to merge three state-owned banks as a progressive move, noting that it signifies the government's commitment to strengthen the banking sector.
According to the chamber, the merger will lead to greater operational efficiencies and Dena Bank, Vijaya Bank and Bank of Baroda would benefit through a synergistic relationship that would leverage one another's network, customer base and access to low-cost deposits.
"This is a progressive move and signifies the government's determination to strengthen the banking sector in the country for a better performance and service delivery," said Rashesh Shah, President of Ficci.
"A stronger banking sector is vital for the overall health of the economy and we hope to see more such measures in the times ahead," Shah added.
The government said the three lenders will be merged to create the country's third largest bank after SBI and ICICI Bank as part of efforts to revive credit and economic growth.
The move follows top lender State Bank of India last year merging with itself five of its subsidiary banks and taking over Bharatiya Mahila Bank, a niche state-run lender for women.
The government owns majority stakes in 21 lenders, which account for more than two-thirds of banking assets in Asia's third-biggest economy.