One of the most interesting and large PSU bank merger will come into effect from April 1. Continuing its merger plan for public sector banks, government last year, decided to merge one weaker lender Dena Bank and anchor lender Vijaya Bank with a 130-year-old Bank of Baroda (BoB). All these banks are different from each other, have different business operations, hold different positions and have different experiences. This would be second biggest merger plan of centre, after largest lender State Bank of India (SBI) acquisition with its own six associated banks. While there won’t be much material change in BoB considering it is the acquirer, the implementation of taking under Vijaya Bank and Dena Bank will be something to watch for. That said, even customers of Vijaya Bank and Dena Bank will see changes in their way of carrying a financial transaction. 

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If you are a Dena Bank and Vijaya Bank customer, then here are list of changes you can feel in your bank account and your way of carrying financial transactions. 

Loans:

There needs some clarity in regards to what will happen with existing borrowers loan, once Dena and Vijaya merge with BoB. Some of the changes can be in regards to loan interest rates and EMI calculation. Currently, a BoB home loan interest rate begins at One year MCLR +1.00% (As per Risk Rating of the applicant/s.) BoB’s MCLR rate is 8.65%. 

Meanwhile, Baroda car loan interest rate is accumulated with One year MCLR + Strategic Premium + 0.25% To One year MCLR + Strategic Premium +2.00% (As per Risk Rating of the applicant/s.) In case of personal loan, the interest rate is derived from 1-year MCLR + strategic premium + 5%. Processing charges for home loan and car loan are 0.50% of loan amount which can go maximum Rs 12,500, while for personal loan charges can go up to maximum Rs 10,000. 

Hence, existing borrowers of the merging banks must clarify with their lender in regards to their loans. On the other hand, the new borrowers would not see any impact, as they can avail loan from the new merged bank. 

Deposits:

Another change can be of the customers who have their deposits like Fixed deposits with Dena Bank and Vijaya Bank. They all offer different interest rates on the investments. For example - BoB’s term deposits below Rs 2 crore, have interest rate of 6.70% for 1 year tenure. The same rate is given between 2 years to 10 years tenure as well. Meanwhile, BoB offers 6.80% rate on tenure of Above 1 year to 400 days and 6.80% rate on Above 400 days and upto 2 Years.

This is not the case with Dena Bank, as it offers term deposit rate of 6.30% on tenures between 5 years to 10 years. Dena offers 6.75% rate on 1 year tenure. Hence, here Dena gives much better rate than BoB in case of 1 year. 

Savings account, Current Account:

These two accounts will be impacted. Customers holding any of these two accounts, will have a change in their cheque book, debit card, credit card, ATM cash withdrawal limits, cash transactions, NEFT, RTGS, service charges and also in minimum average balance. Apart from this, savings account interest rate can also see a shift. 

At BoB,  not more than 50 debits per half year should be allowed in SB a/c and in case the number of debits exceeds 50 a service charge of Rs. 15/- per debit exceeding 50 debits be charged. In SB Accounts of individuals -30- leaves will be free in a financial year. Only two cheque books will be issued at a time.

In regards to current account, Rs 2,000 will be a minimum balance for rural and semi-urban areas, while Rs 10,000 balance is must for customers in urban and metro areas. 

Branches:

Generally, this should not be impacted as they will continue to be operational, however, with new name and features. But it also needs to note that, as part of merger some branches can be closed, which can affect customers in those locality. 

Other Details:

You might will have to change your personal details in regards to income tax department, national pension scheme (NPS), public provident fund (PPF) tax saving schemes, income tax department and SIPs, etc. These new changes can be your bank name, IFSC code, etc. 

Hence, before April 1 comes in, make sure to have a one-on-one interaction with your bank in regards to the above mentioned impact on you and your bank account. Generally, the banks will try as much as possible to avoid impact on your end, however, it is always advisable to take a step from your end.