Mergers of Banks in Economy – Indian Scenario

Abstract

Banking area possesses a significant spot in each economy and is one of the quickest developing sectors in India. The challenge is very high and tough from the worldwide player’s i.e. International banks. On the counter part, both public and private banks are also facing strong competition among themselves to reach the targeted audience. But the worrying factor is Non performing assets are also increasing simultaneously with core business. The result is mergers in the banking sector in order to reduce the NPA. The most recent and largest merger in the history of banking industry took place on April 1, 2017 i.e., State bank of India and its associates banks. And, now the govt. of India announces India’s biggest and largest mega banks merger on august 30, 2019, i.e., merging of 10 public sector banks into 4 large banks. These banks are oriental bank of commerce and united bank of India merging with Punjab national bank; Syndicate bank with Canara bank; Andhra bank and corporation bank merging with Union bank of India; and Allahabad bank merging with Indian bank; This merger will bring nearly a half yearly of all outstanding loans in Indian’s banking sector. This big bank merger will be a good move from the central govt. to reach $5 trillion economy in next 5 years. This merger will help to give some boost to the Indian economy, which is suffering with high rate of NPA’S. In this research paper an attempt is made to know the impact of banks performance after merger will really give acceleration to the economic growth rate or not.