Consolidation in Indian Banking Sector: Evidence and Challenges Ahead PDF Download

Author: Brajesh Tiwari
Publisher:
ISBN: 9781482674026
Category : Antiques & Collectibles
Languages : en
Pages : 136

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Book Description
The Global mantra Liberalization, Privatization and Globalization (LPG) process which was started in early 1990s has brought so many changes in the economic scene of the country. This process of economic reforms has brought competition not only from India but also from Overseas. In the corporate world it is said if you can't beat your competitor then go with them i.e. merge your company with your rival or take them over. So all it boils down to is the survival of the fittest. This process helps in attaining greater market share, acquiring additional brands, cannibalizing competing brands, realizing improved infrastructure, creating new synergies, and capitalizing on efficiencies and economies of scale or to globalize in the shortest span of time. Banking system is deemed as the bloodline of any economy and banks are trustees of public money. Therefore, its depositors have higher stake in welfare and growth of banks than its shareholders. The failure of a bank has more widespread implications than a failure of a manufacturing company. The banking sector reforms, introduced in the early nineties and continued since then, from part of the overall economic reform programme aimed at improving the competitiveness and efficiency of the economic system. The banking reforms, similarly, were also aimed at making banks more efficient and viable. Because of these reforms the capital adequacy of the Indian banks is now on par with international standards. Similarly, the level of net non-performing assets has come down to very manageable levels. An issue that is in the forefront of banking reforms currently is that of bank consolidation. To meet the challenges of global economy and to face increased global competition, Indian banks are changing their strategic focus and re-orienting their operations though restructuring processes to achieve the efficiencies required to survive and integrate into global economy. Prior to 1999, the amalgamations of banks were primarily triggered by the weak financials of the banks being merged, whereas in the post-1999 period, there have also been mergers between healthy banks. However, merger of public sector healthy banks have not taken place till now. Consolidation will provide Indian banks the 'size advantage' that most foreign banks have. Recent reports on banking sector often indicate that India is slowly but surely moving from a regime of `large number of small banks' to `small number of large banks'. The Government of India and RBI has also mentioned at several occasions that an early consolidation in banking industry is needed. But before banks go in for mergers, they need to chalk out a detailed plan on how to tackle challenges such as technology integration, HR management, and many other issues into consideration. This Book "Consolidation in Indian Banking Sector: Evidence and Challenges Ahead" is a modest attempt to cover all important issues regarding M&A in Indian Banking Sector. The whole study is divided into five chapters. The first chapter: Introduction, is introductory in nature briefly traces out the evolution of Mergers and Acquisitions (M&A) in India in banking sector. The second chapter: Review of Literature; focuses on the review of related studies of mergers and acquisitions undertaken by different scholars and researchers. The third chapter: briefly discusses M&A activity in Indian Banking Industry and also covers various laws related to M&A. The fourth chapter: Mergers and Acquisitions in the Banking Industry: An Analysis -I; makes a comparison of actual and predicted values of selected variables in banks under study. With the help of statistical tools the effectiveness of M&A has been tested. The fifth chapter: Mergers and Acquisitions in the Banking Industry: An Analysis -II; analyses the performance of the selected banks by using various financial ratios.