Merger And Acquisition Of Indian Banks
Bank merger list 2020: Banks serve as the backbone of the financial sector, which facilitates the proper utilization of the financial resources of a country. The banking reforms which were taken in 1991 were mainly done to make the banking sector more competitive, fundamentally sound and in line with the international standards.
Liberalization brought the emergence of new private sector banks as well as international banks; inducing a competitive spirit among various Banks and bringing out the best in the industry.
Bank merger list
For expanding the operations and cutting costs, business entrepreneurs and the banking sector are using mergers and acquisitions.
TABLE OF CONTENT
- What Are Merger And Acquisition
- Motives and rationale for mergers
- Reasons for the consolidation
- Evaluating the efficiency of the merger
- List of banks merged in 2021
What Are Merger And Acquisition
Basically, in case of a merger, one or more entities will be merged or will become part of another entity and once it becomes a part of the new entity or the acquirer it will lose its recognition.
Motives and rationale for mergers
- It is used as a worldwide strategy for achieving larger size by the consolidation of banks,
- Increased market share,
- Faster growth and synergy for becoming more competitive through economies of scale.
- It is a useful tool for the survival of weak banks by merging into a larger bank. (main reason in India, as due to increasing NPAs)
- Some private banks used mergers as a strategic tool for expanding their horizon.
- Some private banks used mergers as a strategic tool for expanding their horizon.
A recent report on the banking sector indicates slowly but surely Indian banking system is moving from a regime large number of small banks” to “Small numbers of larger banks”. let us know the Reasons for the consolidation of the Indian banking system
- The number of public sector banks in India is very high
- Fulfillment of target of recapitalization of PSBs which is announced to be INR 2.1 lakh cr.
- The regulatory burden of rbi will come down, it will be easier to autoregulate less number of entities
- NPAs of public and private sector banks have risen extensively in the last decade,
- Recommendation of Narasimhan committee to bring indian banks, to be one of largest at international level.
Evaluating the efficiency of the merger
For evaluating the efficiency of the merger in the public and private sector banks we can analyze pre and post-merger periods.
- The study has been based majorly on Secondary data collected from various publications and websites of RBI, Indian Bankers Association, websites of acquirer and bank, various research papers, and books.
research says that the following aspects show negative impacts of mergers due to their decreasing trends:
- Return on equity,
- Return on assets,
- Net profit ratio
- The yield in advance and yield on investment.
- Due to the underutilization of increased assets and investments, the bank’s respective yield has decreased.
Although following has shown positive growth in all banks i.e. :
- Earnings per Share,
- Profit per employee,
- Business per employee,
- The Assets, Equity, Investment, and advances of all banks increases,
- Optimum utilization of workforce available.
Conclusively, Present reforms are curative but not preventive. There are some challenges, concerns or issues associated with this kind of merger that should be taken care of by a curative approach promptly.
List of Merged Banks in 2021
| Anchor Bank | Banks Merged |
| Punjab National Bank | · Oriental Bank of Commerce
· United Bank of India |
| Canara Bank | · Syndicate Bank |
| Indian Bank | · Allahabad Bank |
| Union Bank of India | · Andhra Bank
· Corporation Bank |
| Bank of Baroda | · Dena Bank
· Vijaya Bank |
| State Bank of India | · State Bank of Bikaner and Jaipur
· State Bank of Hyderabad · State Bank of Mysore · State Bank of Patiala · State Bank of Travancore · Bharatiya Mahila Bank |
Other useful links:
- Banking awareness PDF by arihant
- Analytical Reasoning by Mk Pandey Pdf
- Computer Awareness Book by Arihant PDF
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