The government announced the consolidation of the three banks into a single entity on September 17.
Shares of Bank of BarodaÂ (BoB) dropped more than 10 percent, whileÂ Dena Bank and Vijaya BankÂ gained 10-20 percent after the government announced its proposal to merge the three public-sector banks (PSBs).
Net non-performing asset (NNPA) ratio of the combined entity will be at 5.71 percent, significantlyÂ lower than the PSB average (12.13 percent)
Dena Bank, which is currently under the Reserve Bank of India's (RBI) prompt corrective action (PCA) framework, will likely operate as a regular bank after the merger.
Shares of BoBÂ has touched an intraday low of Rs 116.50, falling as much as 13.7 percent.
Two brokerages have downgraded BoB. IDFC has downgraded the stock to neutral, and Deutsche Bank has cut the stock's rating to Hold from Buy.
Shares of Dena Bank hit an intraday high ofÂ Rs 19.10, jumping as much a 19.7 percent.
Vijaya Bank's shares hit an intraday high of Rs 66, rising as much as 10.4 percent.