Content area
Full Text
Abstract
Mergers and Acquisitions in the Indian Banking Sector are going to be the order of the day. India is slowly but surely moving from a regime of 'large number of small banks' to small number of large banks'. Clearly, therefore from the point of view of financial system, consolidation of banks is imperative. The objective would be strengthening of banks, economies of scale, global competitiveness, cheaper financial services and retaining of employees for merging skill sets. Consolidation will provide banks with new capabilities, technologies and products, help to overcome entry barriers, ensure immediate entry into new markets and lower operating costs through consolidation of resources. In India history of Mergers is as old as formation of Imperial Bank of India y merging Bank of Bengal, Bank of Bombay and Bank of Madras in 1921. Mergers in public sector mainly took place primarily to protect the interest of depositors of weak private banks like, Hindustan commercial Bank faced the moratorium in 1988 and was merger with PNB. Another example of merger is merger of Global Trust Bank with Oriental Bank of Commerce. In this moratorium, government imposes a freeze on the bank's liabilities so that bank is not able to grant any loan or advances, incur any liability, make any investment or disburse any amount.
1. Introduction
Mergers and Acquisitions in the industrial and service sector have brought new life to the style of doing business in today's world. Globalization, technological changes, market deregulation and liberalization have driven the M&A wave across the world. Banking sector is also moving along this wave. As the existence of too many banks result in the paradox of low profitability per customer for the banks and higher pricing for the customers. Clearly, therefore, from the point of view of financial system, consolidation of banks is imperative. The objective would be strengthening of banks, economies of scale, global competitiveness, cheaper financial services and retraining of employees for merging skill sets Consolidation will provide banks with new capabilities, technologies and products, help to overcome entry barriers, ensure immediate entry into new markets and lower operating costs through consolidation of resources. In India history of Mergers is as old as formation of Imperial Bank of India y merging Bank of...