Cabinet approves merger of three state-owned banks

India`s cabinet has approved the merger of state-run Vijaya Bank and Dena Bank with Bank of Baroda, the government said on Wednesday, in a step aimed at cleaning up the country`s banking system.

India had announced the merger plan last year amid growing concerns over rising bad loans in the banking sector. Banking sector reforms are a major plank of Prime Minister Narendra Modi`s government`s plans to revive lending which has slowed as banks struggle with bad debt.

The merged bank will become India`s second largest public sector bank and will "help create a strong globally competitive bank", the government said in a statement.

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The merger will come into force on April 1, the government said.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)