Motives for Mergers and Acquisitions in the Indian Banking Sector - A Note on Opportunities & Imperatives

Abstract

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 aim of this paper is to probe into the various motivations for mergers and acquisitions in the Indian Banking sector. Thus, literature is reviewed to look into the various motivations behind a banks' merger/ acquisition event. Given the increasing role of the economic power in the turf war of nations, the paper looks at the significant role of the state and the central bank in protecting customer's interests vis-à-vis creating players of international size. While, gazing at the mergers & acquisitions in the Indian Banking Sector both from an opportunity and as imperative perspectives, the paper also glances at the large implications for the nation.

Keywords: acquisitions, banking supervision, commercial banking, competition, India, international, mergers, motive

JEL Classification: G21, G28, G34, K21, L40