Published Online:January 2025
Product Name:The IUP Journal of Accounting Research & Audit Practices
Product Type:Article
Product Code:IJARAP100125
DOI:10.71329/IUPJARAP/2025.24.1.168-180
Author Name:Joy Chakraborty
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:168-180
Bank mergers were primarily seen as a better way for the government to improve and boost economy by synchronizing banking operations. A slew of banking reforms in India, were initiated in 2020, including the merger of 10 nationalized banks into four entities, thereby reducing the total number of public sector banks to 12 from the existing 27. The Union Government went ahead with the merger of Oriental Bank of Commerce and United Bank of India with Punjab National Bank, Syndicate Bank with Canara Bank, Andhra Bank and Corporation Bank with Union Bank of India, and Allahabad Bank with Indian Bank, with effect from April 1, 2020. At the same time, there exist several challenges in a bank mergers with respect to logistics, synergizing accounts, and branch integration. The present study analyzes the post-merger financial performance of the newly merged banking entities from 2020 to 2022 using modified Altman Z-score model (1968), in the backdrop of government policy decisions. The results show that the merged public-sector commercial banks did not produce any significant financial and operating synergies, as the mergers were mostly executed to save the ailing banks from financial bankruptcy.
With a focus on technological advancement and rising competition between corporate entities, inorganic growth through mergers and acquisitions (M&As) has become the preferred choice and an effective strategy to penetrate new markets and new business verticals.