The Impact of Indian Banking Sector- A Comparative Study of Public and Private Sector Merged Banks- A Study
- October 26, 2019
- Posted by: RSIS
- Categories: IJRSI, Social Science
International Journal of Research and Scientific Innovation (IJRSI) | Volume VI, Issue X, October 2019 | ISSN 2321–2705
Dr. V.Venkateswara Rao1, D.Pushpa Sri2
1Professor in Management, PACE Institute of Technology & Sciences, Ongole, Andhra Pradesh, India
2Assistant Professor, Department of MBA, PACE Institute of Technology & Sciences, Ongole, Andhra Pradesh, India
Abstract: – Indian economy is known for its perseverance, over the years it has faced continuous fluctuation, global economic depressions and recent reforms of the Government with ease. The Indian Banking sector has its own reputation in the international level for maintaining its stability, even though the global economic environment and the emerging trends in financial sector pose challenges. A merger is simply the combining of two business entities to form a larger one but with no explicit change in ownership. This is in contrast to an acquisition where one business entity takes ownership control over another by paying for the ownership privilege in cash, stock, or other means. In the case of state owned banks that are being merged now, where the government is the majority shareholder, there will be no change in ownership but merely a restructuring of how these banks how these banks are organized.
Today, the Banking industry is counted among the rapidly growing industries in India. It has transformed itself from a sluggish business entity to a dynamic industry. The growth rate in this sector is remarkable and therefore, it has become the most preferred banking destinations for international investors. A relatively new dimension in the Indian banking industry is accelerated through mergers and acquisitions. It will enable banks to achieve world class status and throw greater value to the stakeholders. The main objective of this paper is to analyze whether the bank has achieved financial performance efficiency during the post merger & acquisition period specifically in the areas of profitability, leverage, liquidity, and capital market standards. This study is testing the impact of merger and acquisition of banks and provides insights about their role in performance.
Key words: Public sector banks, NPA’s, Merger & acquisition etc.
I. INTRODUCTION
The Merger is part of the government’s efforts to consolidate the banking Industry with an eye on overcoming the bad loan crises. Merger is an attempt by the governments to help stem the rise of the bad loans or NPA at a time when corporate demand is weak. Merger of the Banks are one way of managing the problem and therefore cannot be totally discounted. However, the track lies in ensuring that the merger fallout is managed prudently.
