Mergers and acquisitions in Indian banking: What works, what fails, and why

The present study based on Indian banking mergers, examines the impact of merger and acquisitions on the development of India banking sector. India is slowly by surely moving from a regime of large number of small banks to small number of larger banks. Bank mergers can increase value by reducing costs and/or increasing revenues. Cost reductions can be achieved by eliminating redundant managerial positions, closing overlapping bank branches and consolidating back office functions. Cost cutting potential may be greater when merging banks have geographical overlap. Revenue enhancement can also be attributed from sources like cross selling of bank services. There are diverse ways to consolidate the banking industry the most commonly adopted by banks is merger. Merger of two weaker banks or merger of one healthy bank with one weak bank can be treated as the faster and less costly way to improve profitability that spurring internal growth. The findings of this study reveal that mergers and actuations plays significant role in the development of financial growth of India banking sector.