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. This study 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.

Banking has been the core of all financial activities in recent years. New age banking has come up with several IT-enabled services. In the era of revolution in banking with several initiatives like Core Banking Solutions, M-Banking, RFID, etc., the sector has become quite dynamic and exciting.

With financial inclusion also receiving much attention (reach of Indian banks is extensively remarkable) and RBI deciding to open up Indian banking sector for new players (“at least, one bank will receive license before August, 2015”, The Governor, RBI, Credit Policy, June 2, 2015), the banking sector has become much more dynamic.

As the needs and expectations from the banking sector are widening, strategic reforms are also taking place in the banking sector. There is a gradual shift in the means and ways which banks adopt to carry out their businesses. This has led banks to open up new branches with innovative models and expand themselves by employing heavy investments. This in turn has raised challenges for banks for sustaining their returns on assets.