Merger and acquisition in Indian banking sector

Abstract

India as a developing nation relies on its banking sector to aid economic development. Any change in this structure, thus, has far reaching consequences – consolidation through mergers is one such mechanism, which alters the industry composition and reshuffles the relationships. The following report is an attempt to analyse the motivations, rationale, mechanisms, advantages, disadvantages and the impact of mergers in the Banking sector. The Indian context is also intriguing because of the presence of government holding in the largest banks of the country, managing majority of banking, alongside privately owned and smaller banks. We look at the merger issue from different points of view – regulator, economic, insider, external and social. The findings are then applied to gauge the relevance of the recent merger of SBI with its 5 associate banks and Bharatiya Mahila Bank.