Page 23 - Banking Finance October 2022

COVER STORY

MERGERS IN

INDIAN

BANKING

INDUSTRY

Introduction In the Indian Banking system, there have been rapid
changes like the entry of new foreign banks with substantial
Banks are the pillars and responsible for making the present
financial resources, new technological innovations to
world what it is today. They are the avenues, which
smoothen the banking operations, the introduction of
facilitate investment and stimulate economic activity by
complex financial products and the changing customer
mobilizing the savings of the public and channelizing funds
behavior, who are demanding a wide range of products at
to borrowers with promising investment propositions and
lower prices with excellent service quality. The increasing
needs. Keeping this view in mind, the world economies have
competition has reduced the profit margins of the banks
undertaken several measures to ensure that the banks are
considerably and many are struggling to achieve profitability
strong and can cater to the needs of the ever-changing
in this dynamic environment. They are looking for new ways
business environment.
to increase their market share and enhance their
profitability.
About the author
Dr Pacha Malyadri One of these ways is Mergers
Former Principal & ICSSR A merger is one of the most prevalent methods used by firms
Senior Fellow Centre for Economic and
to increase their market share by creating synergy and
Social Studies, Hyderabad
economies of scale. A merger implies a combination of two
or more firms into a single entity, while Acquisition indicates
Dr S.Sirisha
one firm taking over another. The word merger can be
Lecturer in Commerce,
abbreviated as - M - Mixing, E -Entities, R - Resources for, G
TSWR Degree College,
- Growth, E - Enrichment and R - Renovation Mergers is
Warangal
considered to be one of the methods which can strengthen
BANKING FINANCE | OCTOBER | 2022 | 23