Effect of Mergers on Bank of Baroda Before and After, a Study of the Banking Sector

Abstract

The banking industry has been essential to the economy’s development. Mergers and acquisitions are one of the best ways for banks to expand. The government merged banks when banks had more non-performing assets (NPA), less efficiency for work, no global reach, less profitable situation, or had other unimportant features. The government decided to combine three public sector banks in 2019, namely Vijaya Bank, Dena Bank, and Bank of Baroda (BOB). BOB rose to become India’s third-largest bank following the merger. In order to analyze the position of the bank, the study covered various indicators like Gross & Net NPA, operational profit, net profit, capital adequacy ratio (CAR), return on assets (ROA), return on equity (ROE), earning per share (EPS), deposits & advances. Charts are used to analyze these factors, and data from the two years before and two years after the banks’ merger has been used. Secondary sources such as annual reports, websites, various publications, etc. has been used to get the data. After the two-year merger, operating profits rose by 40.11% and 52.96%, while net profits rose by 25.81% and 91.01%, demonstrating improved efficiency. Since gross NPA exceed net NPA, banks had control the NPA such that inefficiency became efficiency. Deposits and advances have both climbed, and the CAR has as well, indicating that there is enough capital on hand to handle losses. Since the merger, EPS, ROA, and ROE have all dramatically increased. According to the study, the bank’s performance of BOB improved after the merger.