Merged Banks in the Indian Banking Sector: A Comparative Study of Strategic Similarities and Dissimilarities

Indian government and the Reserve Bank of India arein the process of implementing a government regulated consolidation policy. The aim of revamping the entire banking sector is to enforce the BASEL III norms, bring about much recommended banking reforms, and create a few large Indian banks that could compete on the international platform. These objectives cannot be realised if the mergers fail to produce a positive impact. Strategic management literature argues that the strategic features of the merging entities are a deciding factor for the future performance of the merged unit. What the merging banks were, impacts what the merged bank will be. This paper considers a sample of 22 Indian banks that merged during 2007–2017 to compare the strategic similarities and dissimilarities of targets and acquirers. The results show that in the majority of the cases, acquirers are the large productive banks, which are highly equipped to face risk. On the other hand, targets are comparatively smaller, but better capitalised banks.