Post-Merger Perfor mance Evaluation:A Case of Indian Public Sector Banks

Abstract

General Subject class: Mergers & Amalgamations

Sub Selection class: Mergers in Public Sector Banks

Banks play a crucial role in a country's economic and social progress. With the central government aiming to transition India into a developed economy by 2047, it has strategically consolidated public sector banks from 29 to 12, over time, to strengthen their financial and managerial capabilities. This study examines the effectiveness of the large-scale amalgamations that occurred in 2020, where 10 public sector banks merged into 4 entities. Besides presenting the secular growth, post-merger, in business and related parameters, the evaluation employs paired t-tests on data from 8 half-yearly financial statements, before and after the mergers, focusing on variables relevant to bank performance. Despite facing challenges such as the Covid-19 lockdown immediately post-merger, the acquiring banks have shown resilience and improved performance over time. The author suggests conducting similar longitudinal studies periodically to gauge the long-term sustainability of these mergers.