New Delhi, Jan 3 (KNN) The Union Cabinet chaired by Prime Minister Narendra Modi has approved the scheme for amalgamating Bank of Baroda, Vijaya Bank and Dena Bank with Bank of Baroda as the transferee bank and Vijaya Bank and Dena Bank as transferor banks.

The amalgamation will be the first-ever three-way consolidation of banks in India with the amalgamated bank being India's second largest Public Sector Bank.

The amalgamation will help create a strong globally competitive bank with economies of scale and enable realisation of wide-ranging synergies.

Leveraging of networks, low-cost deposits and subsidiaries of the three banks has the potential of yielding significant synergies for positioning the consolidated entity for substantial rise in customer base, market reach, operational efficiency, wider bouquet of products and services, and improved access for customers, according to the release.

Upon commencement of the scheme, the undertakings of the transferor banks as a going concern will be transferred to and will vest in the transferee bank, including, inter alia, all business, assets, rights, titles, claims, licenses, approvals and other privileges and all property, all bor­rowings, liabilities and obligations, said the release.

"The amalgamated bank will be better equipped in the changing environment to meet the credit needs of a growing economy, absorb shocks and capacity to raise resources", it added.

Economies of scale and wider scope would position it for improved profitability, wider product offerings, and adoption of technology and best practices across amalgamating entities for cost efficiency and improved risk management, and financial inclusion through wider reach, it added.

Besides, it would also enable creation of bank with scale comparable to global banks and capable of competing effectively in India and globally.

According to the statement released,  the merged banks will have access to wider talent pool and large database that may be leveraged through analytics for competitive advantage in a rapidly digitalising banking context.

In addition, benefits wojld flow as a result of wider reach and network and reduction in distribution costs for the products and services through subsidiaries.

This merger will further enhance the banking services through a strong network and will provide easy access to credit to customers.

The scheme will come into force on April 1, 2019, it added.