Banking sector has turned more dynamic over the years. New horizons are opening up
and new challenges are also shaping up. In this scenario, banks are attempting to grab
many opportunities and are responding to several challenges through their strategic moves of mergers and acquisitions.
The first paper of this issue centers on the above theme. The paper, “Responding to Opportunities and Challenges Through Mergers and Acquisitions: Evidence from Four Indian Banks”, by Abhay Raja, aims to analyze the effectiveness of mergers and acquisitions in the Indian banks. The study has taken four prominent amalgamations of banking sector in the last decade as samples. The analysis was done by taking five years each before and after the amalgamation. The effectiveness of amalgamations was analyzed by considering profitability, liquidity and solvency ratios of the banks. The analytical computations were performed through SPSS. It was observed that amalgamations do not enhance the companies’ profitability significantly. On the other hand, it helps banking companies to escalate their liquidity position and the ability to repay debt.
The next paper of the issue, “Post-Mergers and Acquisitions Performance of Select Indian Banks”, by I Babu Rathinam and P S Sridharan, examines the impact of mergers and acquisitions on the financial efficiency of selected banks in India. The post-M&A performance is measured using the ratio analysis. The main focus is on the profitability parameters, liquidity parameters, solvency parameters and overall efficiency parameters. The results reveal that there is significant change in the earnings of the shareholders; a little change in liquidity position; significant change in the long-term solvency position of the firms; and significant change in the overall efficiency of the banks during the post-merger period 2008-2013. The results also indicate that M&As in India have significant impact on the financial performance of banks and that the acquiring firms are able to generate value.
The issue then moves on to another burning issue of e-banking. The paper, “E-Banking Services in India: A Broad-Brush Survey of Indian Banks”, by Vikas Chauhan and Vipin Choudhary, opines that in this era of Internet and advanced information and communication technology, it is very important for banking industry to introduce innovative electronic banking delivery channels and services. The paper attempts to present a comprehensive view of the current status of e-banking in India and analyzes the growth and trends of electronic channels of banking service delivery. In addition, the paper presents a comparative analysis of public and private sector banks. The analyses reveal that e-banking is becoming massively popular in India and has led to huge competition among banks. Indian banks are showing higher growth and trends in terms of electronic banking delivery channels, and both public and private sector banks provide e-banking services competitively, but the main competition exists between the SBI Group and the new private sector banks.
The last paper, “Efficiency and Profitability of Public and Private Sector Banks in India: Data Envelopment Analysis Approach”, by Ravi Inder Singh and Simran Kaur, examines the inter-bank relative efficiency of the public and private sector commercial banks in India. The study contributes to the literature in a way that most of the literature in Indian banking sector focused on measurement of efficiency. This study also includes analysis of slacks which remains to be explored for getting a clear picture about the causes of inefficiency. Though the issue is important, no recent study to the best of our knowledge has addressed it. Data Envelopment Analysis (DEA) approach has been used to examine the efficiency level achieved and to identify the slacks. The results reveal that private (Indian) sector banks are relatively more efficient as compared to public sector banks. The strategies advised in the study to the comparatively less efficient banks will help them not only in improving upon efficiency, but also in lowering the cost of their products for the overall benefit of their customers. Efficiency is also found to be directly affecting the profitability of banks.
Automated Teller Machines (ATMs): The Changing Face of Banking in India
Bank Management
Information and communication technology has changed the way in which banks provide services to its customers. These days the customers are able to perform their routine banking transactions without even entering the bank premises. ATM is one such development in recent years, which provides remote banking services all over the world, including India. This paper analyzes the development of this self-service banking in India based on the secondary data.
The Information and Communication Technology (ICT) is playing a very important role in the progress and advancement in almost all walks of life. The deregulated environment has provided an opportunity to restructure the means and methods of delivery of services in many areas, including the banking sector. The ICT has been a focused issue in the past two decades in Indian banking. In fact, ICTs are enabling the banks to change the way in which they are functioning. Improved customer service has become very important for the very survival and growth of banking sector in the reforms era. The technological advancements, deregulations, and intense competition due to the entry of private sector and foreign banks have altered the face of banking from one of mere intermediation to one of provider of quick, efficient and customer-friendly services. With the introduction and adoption of ICT in the banking sector, the customers are fast moving away from the traditional branch banking system to the convenient and comfort of virtual banking. The most important virtual banking services are phone banking, mobile banking, Internet banking and ATM banking. These electronic channels have enhanced the delivery of banking services accurately and efficiently to the customers. The ATMs are an important part of a bank’s alternative channel to reach the customers, to showcase products and services and to create brand awareness. This is reflected in the increase in the number of ATMs all over the world. ATM is one of the most widely used remote banking services all over the world, including India. This paper analyzes the growth of ATMs of different bank groups in India.
International Scenario
If ATMs are largely available over geographically dispersed areas, the benefit from using an ATM will increase as customers will be able to access their bank accounts from any geographic location. This would imply that the value of an ATM network increases with the number of available ATM locations, and the value of a bank network to a customer will be determined in part by the final network size of the banking system. The statistical information on the growth of branches and ATM network in select countries.
Indian Scenario
The financial services industry in India has witnessed a phenomenal growth, diversification and specialization since the initiation of financial sector reforms in 1991. Greater customer orientation is the only way to retain customer loyalty and withstand competition in the liberalized world. In a market-driven strategy of development, customer preference is of paramount importance in any economy. Gone are the days when customers used to come to the doorsteps of banks. Now the banks are required to chase the customers; only those banks which are customercentric and extremely focused on the needs of their clients can succeed in their business today.
