Small Number of Big Banks: An Overview of Recent Mergers in Indian Banking Sector
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Abstract
Government of India with its vision to create globally competitive banks has initiated the consolidation of smaller PSB’s in bigger entities. The merger of five regional banks with State Bank of India and merger of two Public Sector Banks (PSBs) Dena and Vijaya with Bank of Baroda in recent past (2019) followed by mega consolidation plan of merging ten public sector banks into four banks is an indication of direction of the wind is going to blow for Indian banking industry. This policy of consolidation is an important tool used by banks for corporate restructuring and is in line with reformist agenda pursued by Govt of India (GOI) since 1990. These entities are to receive recapitalization funds from GOI to boost their net-worth strengthening their capital base. The present research is conducted to understand the objectives and statistics behind these mergers.
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