M and a Issue and Challenges.Pdf

ZENITH

International Journal of Multidisciplinary Research

Vol.1 Issue 4, August 2011, ISSN 2231 5780

MERGERS OF BANKS: SOME ISSUES AND CHALLENGES

DR. SANJAY TIWARI*

* Asst. Professor, Department of Management,

Central University of Haryana, Mahendergarh.,

Temp. Camp Office, New Govt. B.Ed. College Building, Narnaul (Haryana).

ABSTRACT

Consolidation through mergers, takeover and acquisitions has drawn attention of financial world in the recent post. Narasingham Committee recommendations and BASEL conventions have also propagated the need of mergers and consolidations of banking industry to bring synergic consequences. Mergers are not very new phenomenon world wide but in India the speed with which it has taken entry into the Indian banking is sufficient to raise doubts about need, implications, issues and synergy in the financial system. Should Indian banking take experience from the past? Should there be different models of consolidation of banking in Indian context? What will happen to beautiful small banks when big fishes gut their shares? This paper is a small attempt to peep into some important dimensions and issues in the post merger regime of banking system in India. These issues may vary from financial restructuring to human resource to IT consolidation etc. Will human face of banking disappear after merger with an objective of synergy in operations and bringing financial strength? There are some issues, questions and challenges which need to be addressed in an inevitable environment of imminent reality of banking mergers in India.

KEYWORDS: Merger, Consolidation, Financial Depth, Loan to GDP ratio.

INTRODUCTION

BACKGROUND

In a market driven competitive world, the integration of financial system is quite inevitable. India can not stay aloof from these trends where consolidation, globalization of operations, universalisation of banking and innovation in technology has ushered. To face the competition effectively,...