The Union Cabinet on Wednesday approved the scheme of amalgamation paving the way for the amalgamation of Bank of Baroda, Vijaya Bank, and Dena Bank, the first-ever three-way consolidation of banks in India.

"The amalgamation will help create a strong globally competitive bank with economies of scale and enable the realisation of wide-ranging synergies," read the press release issued to the press after Cabinet meeting chaired by Prime Minister Narendra Modi.

"Leveraging of networks, low-cost deposits and subsidiaries of the three banks have the potential of yielding significant synergies for positioning the consolidated entity for a substantial rise in customer base, market reach, operational efficiency, a wider bouquet of products and services, and improved access for customers," further reads the statement.

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, said the Central government.

"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," added the statement.

"It would also enable the creation of a bank with a scale comparable to global banks and capable of competing effectively in India and globally," further stated statement.

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