Small is certainly beautiful, but big is more competitive in the upcoming era of globalization and transnationali-zation. To survive and grow, even the domestic enterprises need to gain adequate size and strength to fight ahead in a market which is increasingly becoming crowded with foreign and Indian giants. Consequent upon nationalization, Indian banking sector had witnessed a massive but ill-planned growth in the 1970s and 1980s of the last millennium placing over-reliance on internal growth in a fast-forward mode, resulting in the creation of a weak and unsustainable system. Of late, on realization of the untoward development and wrecking structure due to poorly managed expansion in banking sector, the policy makers took a `U` turn to initiate privatization and consolidation exercise on the basis of the recommendations of the Narsimham Committee. While chalking out a comprehensive blueprint for banking reforms, the committee stressed on eliminating the flab from the lumbering but fragmented financial system through mergers. The government had a painful experience of the merger of New Bank of India with Punjab National Bank (PNB) in 1993, resulting into PNB showing its first ever loss in 1995-96 and visible problems of integration of the two entities despite both being north-based nationalized banks. Though this experiment dampened the newly emerging merger wave, it could also be viewed as a part of the age-old `bail-out' measure rather than a well-crafted strategy to generate synergistic advantages to create value for stakeholders. Nearly, all the mergers were `gun-point' marriages performed at the behest of the `Big Brother' to save a bank from insolvency and cover up the poor level of surveillance under the veil of the protection of interest of the depositors and employees of the struggling bank in agony.

Professional Banker Magazine, Mergers and Acquisitions, Globalization, Capital Adequacy Ratio, Indian Banking Sector, Financial System, Liberalization, Hypercompetitive Environment, Private Sector Banks, Non Performing Assets, Global Trust Bank, Credit-Deposit Ratio.