A DISSERTATION REPORT

ON
“ A STUDY ON MERGERS AND ACQUISITIONS IN
INDIAN BANKING SECTOR ”

BACHELOR OF BUSINESS
ADMINISTRATION (BBA)
(Affiliated to Mahatma Gandhi Kashi Vidyapith Varanasi, Uttar Pradesh)
BATCH- 2021-2024

Under Supervision of: Submitted By:

Dr. ANJANA SINGH PRINCE KUMAR GUPTA

SMS VARANASI BBA ( VITH Semester)
ROLL NO :-
BBA2125139

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2
 ACKNOWLEDGEMENT

First, I would like to thank almighty for keeping me healthy and active

because of which I was able to complete my project successfully.

I express my greatest gratitude to our Prof. P.N. JHA (Director) of SMS,

Varanasi who gave me such a great opportunity to work on a project where

I can show my creativity, my mentor Dr. Anjana Singh, SMS Varanasi for

providing me knowledge, guidance, and full cooperation extended during

the perusal of my project.

And at the last but not the least I would like to thank my Mentor Prof.

Sandeep Singh (Head of management department), Mr. Atish Khadse

Coordinator of BBA, SMS VARANASI who helped me and enlighten my

path. This report is the outcome of the support which I have received from

people directly or indirectly.

Finally, I would like to show my gratitude to all my family members,

friends, faculty members of SMS, Varanasi whose guidance have helped to

complete this report.

Thanks!

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 DECLARATION

I, PRINCE KUMAR GUPTA , student of School of

Management Sciences Varanasi. Hereby declare that I have

completed the project business model under the guidance and

support of Dr. Anjana Singh

The information that I have written in this project is original to

the best of my knowledge. The content that I am sharing is not

copied and is written by myself.

PRINCE KUMAR GUPTA

BBA (VITH Semester)

ROLL NO :-

BBA2125139

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 PREFACE

BBA is a stepping stone to the management career . In order to achieve

practical, positive and concrete results, the classroom learning needs to be
effectively fed to the realities of the situations existing outside the classroom.

This is particularly true of management. Management students have good

conceptual knowledge of business activities is somewhat in adequate. Doing a
project work on a particular topic needs a lot of detailed study. It gives a better
understanding and knowledge. As a part of curriculum, it is exigent for the
students pursuing the course to do a Dissertation project in this course. The
study project undertaken was on the topic: - “A STUDY ON MERGERS AND
ACQUISITIONS IN INDIAN BANKING SECTOR”

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 INDEX
Sr.NO Particular Page
Number
1 Introduction 6-21

2 Literature Review 22-24

3 Research Methodology 25-17

4 Data Analysis 28-55

5 Finding & Conclusion 56-60

6 Bibliography 61

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 CHAPTER 1

INTRODUCTION

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INTRODUCTION

Mergers and acquisition are having both the aspects of the strategic management’s
corporate finance and management dealing with the buying of selling dividing and combining
the different companies of the similar entities.
After the merger the result is the transact the ownership and a control of a firm to another.

M&A is defined as a restructuring of the result in some entity reorganization with

having the aim to provide growth or positive value. The consolidation of an industry or the
sector that occurs when the wide spread M&A activity concentrates the resources of many
small companies into a few larger ones such as occurred with the automotive industry
between 1910 to 1940.

1.1 What is merger

• A merger is an agreement that unites two existing companies into one new company.
• Mergers are commonly done to expand a company’s reach , expand into new
segments, or gain market share.
• All of these are done to please shareholders and create value.
• Merger is covered regulated/covered by the companies Act, 1856.
• Merger are been refers by finding an acceptable partners, determining upon how
to pay each other and also ultimately creating a new company, which is a
combination of both the companies.
1.1.1 Types of mergers

Conglomerate mergers

When two or more companies are engaged into unrelated business activities. After the
engaged the firm may be operate in the different industries or n different geographical
regions. Pure conglomerate merger involves two firms that have nothing in common. Mixed
conglomeratetakes place between organizations that, while operating in unrelated business
activities, are actually trying to gain product or market extensions through out the merger.

Congeneric Mergers

Congeneric merger is also known as Product Extension merger. When the two or more
companies are operate in the same market or sector with overlapping factors, such as
technology, marketing, production process , research & development . a product extension
merger is been achieved when a new product line from one company is been added to an
existing product line of the other company.

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Market Extension Mergers

When two companies that operates the same products but the complete in different
markets. Companies that engage into a market extension merger seek to gain access to a
bigger market so it is a bigger client base.

Horizontal Mergers

When the two companies are operating into the same industries with two or more
competitors offering the same products or services. The goal is to created a larger business
with the greater market share and economies of the scale since competition among fewer
companies tends to be higher.

Vertical Mergers

When the two companies that are produce parts or services for a specific finished
products merger, the union is reffered as a vertical merger . vertical merger is been occurs
when the two companies operating at different levels within the same industry’s in supply
chain combine their operations. The objectives is to increase synergies achieved through the
cost reduction an which results from merging with one or more supply companies.

1.1.2 Reasons For Bank Merger

• A key reason of bank merger is the weight of mounting bad loans over the years.
• Its creating globally stronger banks that doing away with needless overlaps in the
operations and infrastructure.
• In economies of scale to be bring down costs that have always been at the heart of any
consolidation drive.
• They aimed at the improving operating efficiency, accountability ,governance and
facilitate effective monitoring.
• They also aimed at creating next generation banks with a strong national presence
amd the global outreach accompanied to enhanced capacity to increase the credit to
the various important sectors of the economy.

1.1.3 Merits of A Bank Merger

• A large capital base would help the acquirer banks to offer large loans amount.
• This merger makes RBI to have better control on the system and the implementation
of policies will became easy.
• It will be easy of penetration to the market.
• Technological upgradation can be considered.
• Recapitalization need from the government to reduce.

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 • The cost of operation is been reduce with the help of merger.
• The professional standard is been improve.
• It helps in improve the risk management.
• The geographically concentrated regionally present the banks to expand their
coverage with the help of merger.
• It provides better efficiency ratio for the business of operations as well as the banking
operation which is beneficial for the economy.
• Service delivery can be get improved with the help of merger.
• RBI will be watch banks on it’s performance , especially in the terms of
NPA(NonPerforming Asset) otherwise loans which are not recovered.
• Customers will have a wide range of products like mutual funds and insurance to
choose from the additional to the traditional loans and deposits.
• It NPA percentage of the bank is above prescribed norms, it will asked to merge with
a bigger bank to the case the situation as to combined capital of banks that will be
higher and there by reducing the NPA percentage.

1.1.4 Demerits Of A Bank Merger

• All different banks have different culture, systems, processes, procedures and that
merger will lead to clash of organizational cultures.
• Bank officials and unions of PSBs are against the merger due to the issues with the
employment, security, tenure , etc.
• There are few large inter-linked banks that can expose the broader economy to
enhanced financial risks.
• Employees of the larger bank does not be give equal treatment to the employees of the
smaller bank into new and the merged bank.
• The local identity of small banks are not that big.
• There is materialized and that the customers feel harassed initially that the banks are
working on it.
• It will take sometime to the customers to know that their banks are merged. Even
though it’s mandatory for the banks to inform to all their customer about the merger
some customer may miss the communication and get panic to see their branch board is
replaced with the new one.
• Acquiring banks have to handle the burden of weaker banks , resulting in risk exposure.
• It is difficult to manage the culture and people of different banks.
• The idea of decentralization as many banks that have a regional audience to cater and
customers often the respond very emotionally to the banks acquisition.
• The large banks are more vulnerable to the global economic crises that bail outs
cripple the entire country’s economy.
• It too many mergers of banks and there by the customers that will have the less choice
to bank.
The governing board of the new bank which could lead to employment issues that thecoping with the
staffers disappointment that could be another challenge.

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 INTRODUCTION
1.2 AN OVER VIEW OF INDIAN BANKING SECTORS

In modern economy the importance of banks can not be neglected. Banking sector plays
an vital role in the economic development of the country. Banking sector are a financial
institution, which perform as various function like accepting deposits, lending loans to
agricultural & industrial concerns.

The banking industry worldwide to be transformed concomitant with a paradigm shift in

the Indian economy from manufacturing sector to nascent service sector. Indian Banking is as
a whole in the undergoing changes. Indian banks have always proved beyond the doubt that
adaptability to themselves into a agile and resilient organization.

The Banking sector has been seen ongoing mergers & amalgamation in recent years.
The Reserve Bank Of India (RBI) , the Central Government can create a scheme for the
amalgamation of any nationalized bank with any other nationalized bank or banking sector in
accordance with the banking companies Acts 1970 and 1980 (Acquisition and Transfer of
undertaking).

From the past three decades India’s banking system that has several outstanding
achievements to its credit. The most striking is it extensive reach. Indian banking system has
reached even to the remote corners of the country. One of the main reasons of India’s growth
process is that the Indian banking system has reached even to the remote corners of the
country.

Previously an account holder had to wait for hours and hours at the bank counters for
getting a draft or withdrawing his own money. But today they has a choice. Further the most
efficient bank transferred money from one branch to another branch in two days. But now a
days it is simple as instant messaging or dials a pizza. Money has become the order of the
day.

In India banks are playing a crucial role in the socio economic progress of the country
after the independence. Indian banks have been going through a fascinating phase through the
rapid changes that bought about by the financial sector reforms, which have been
implemented in a phased manner.

The current process of the transformation that should be viewed as an opportunity to

convert into a Indian banking that sound , strong and vibrant system capable of playing its
role efficiently and effectively on its own without imposing any burden on government.

The government has announced after the liberalization of the Indian economy that a
number of reform is measures on the basis of the recommendation of the Narasimhan
Committee to make a banking sector economically viable and competitively strong.

11
 A company would like to takeover another company or seek its merger with that company
to expand espousing backward integration to assimilate the resources of supply and forward
integration towards market outlets. The acquiring company through merger of another unit
attempts on reduction of inventories of raw material and finished goods, implements its
production plans as per the objectives and economizes on working capital investments. In
other words, in vertical combinations, the merging undertaking would be either a supplier or
a buyer using its product as intermediary material for final production.

The following main benefits accrue from the vertical combination to the acquirer company
i.e.
It gains a strong position because of imperfect market of the intermediary products, scarcity
of resources and purchased products;
Has control over products specifications.

It is a merger of two competing firms which are at the same stage of industrial process.
The acquiring firm belongs to the same industry as the target company. The main purpose of
such mergers is to obtain economies of scale in production by eliminating duplication of
facilities and the operations and broadening the product line, reduction in investment in
working capital, elimination in competition concentration in product, reduction in advertising
costs, increase in market segments and exercise better control on market.

It is amalgamation of two companies engaged in unrelated industries like DCM and Modi
Industries. The basic purpose of such amalgamations remains utilization of financial
resources and enlarges debt capacity through re-organizing their financial structure so as to
service the shareholders by increased leveraging and EPS, lowering average cost of capital
and thereby raising present worth of the outstanding shares. Merger enhances the overall
stability of the acquirer company and creates balance in the company‟s total portfolio of
diverse products and production processes

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 1.3 Mega Bank Mergers List in India 2019 to 2020

Acquiring Acquired Bank Year of a merger

Bank

Bank Of Vijaya Bank, Dena April 1, 2019

Baroda Bank

Punjab Oriental Bank April 1, 2020

National Bank Of commerce,
United Bank Of
India
Canara Bank Syndicate Bank April 1, 2020

Union Bank Of Andhra Bank, April 1, 2020

India Corporation Bank

Indian Bank Allahabad Bank April 1, 2020

• Union Finance Minister Nirmala Sitharaman on 30 th August 2019 she announced the
consolidation of the State owned banks (PSBs) in which 10 PSBs being the merged to
form 4 bigger lenders to the strengthen the banking sector struggling with a bad loan.

• The aimed at clean up of the bank balancesheets and creating the lenders of global
scale that can be support the economy’s surge to$5 trillion by 2024.

• Done with two rounds of the bank cosolidation earlier, this is what we want to do for
the robust banking system and a $5 trillion economy.

• FM Sitharaman said that they are trying to build next generation banks, big banks
with the capacity to the enhance credit.

• The key factors for the mergers are the technological platform, cultural similarities,
customer reach, competitiveness, finance secretary Rajiv Kumar added.

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 MERGER 1

History of Bank Of Baroda , Vijaya Bank and Dena Bank

1.1 Bank of Baroda

• On 20th July 1908, the Bank Of Baroda was established as a private bank by the
Maharaja of Baroda, Maharaja Sayajirao Gaekwad lll.
• Headquarter of Bank Of Baroda is in Gujarat in Vadodara formerly known as
Baroda .
• In Maharashtra in Mumbai BOB has its corporate office. In the year 1910, the
Bank Of Baroda as also opened their branch in Ahmadabad city.
• On 19 July 1969, Bank Of Baroda is nationalised by the Government of India,
along with the 13 other major commercial banks of India.

1.2 Vijaya Bank

• Vijaya Bank was established on 23 October 1931 by late Shri. A.B Shetty and
other entrepreneurial farmers of Bangaluru in Karnataka.
• On 15th April the Vijaya Bank wa nationalized. It has corporate office in
Karnataka in Bengaluru.
• In 1958 the bank became a scheduled bank.
• It merger with nine smaller banks on 1969-1968 to grew steadily into a large India
Bank.

1.3 Dena Bank

• Dena Bank was established on 26 May 1938 by Devkaran Nanjee’s family under
the name of Devkaran Nanjee Banking company Ltd.
• On December 1939,Dena Bank adopted its new name by Dena (Devkaran
Nanjee) Bank due to become a public company.
• Dena Bank Ltd was nationalized along with 13 other major banks and it become a
Public Sector Bank on July 1969.
• It has its headquarter in Mumbai Maharashtra .

AFTER MERGER OF BANK OF BARODA , VIJAYA BANK & DENA BANK

• On September 17, 2018 the Narendra Modi Government announced plans to

merger three public sectors banks Mumbai based Dena Bank. Bengaluru’s Vijaya
Bank and the Bank Of Baroda that has its head office in Vadodara Gujarat.
• The merger entity legal asserts of over rs 14 lakh crore, it will be India’s third
largest lender behind the State Bank Of India and HDFC Bank. 6

14
The government has agreed to grant some Rs 5,042 crore to Bank of Baroda to strengthen
the merger financial position.
Due to the merger of Bank Of Baroda its ranks second in India in terms of number
of branches. The number of banks kept under the prompt corrective action
framework by the RBI to four.

Dena bank is among the five PSU banks kept under PCA watch over burgeoning
losses and NPAs. It is based on the third quarter results of Dena bank & Vijaya
bank
, the key credit metrics of the merger entity , with the exception of profitability ,
will be broadly similar to that of Bank of Baroda , according to a Moody’s report .
It also predicts that Bank of Baroda’s profitability will be dragged down by the
NPAs of the other two banks. As per the market reports , cultural integration of the
three banks is been likely to remain an overhang on the bank’s near by term
performance
. The back – end technology integration would , however to be relatively smooth as
all the three banks operate on the finacle CBS platform.
The Bank Of Baroda is set 7,000 crore as a capital.

The agenda of this merger was to reduce Non- performing assert (NPA). At the timeo the
merger proposal the gross NPA ratio of Bank of Baroda , Vijaya bank & DenaBank were
12.4% , 6.9% & 22% respectively. Before the merger of Bank of Barodathe entity would
40% more deposits and 44% more loans , but it would also have 70% more distribution . So
there would be more products and services available to customers after merger. The total
business of Bank of Baroda is expected to be morethan Rs 15 trilion after merger . The sign
of merger is expressing through this Financial Analysis

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 MERGER 2 HISTORY OF PUNJAB NATIONAL BANK, ORIENTAL BANK
OF COMMERCE & UNITED BANK OF INDIA

1.1 Punjab National Bank

• Punjab National Bank was founded on 19th May 1894. It is an Indian Multinational
Banking and financial services company.
• The several leaders are inclued The state owned corporation of Punjab National Bank
was based in New Delhi, India.
• It covered over 80 million customers , 6937 branches & 10681 ATMs across 764
cities. According to RBI, among state run banks in India, Punjab National Bank
topped in the number of loan fraud cases across the India.

1.2 Oriental Bank Of Commerce

• Oriental Bank Of Commerce was established on 19th Feb 1943 in Lahore and it was
founded by Late Rai Bahadur Lala Sohan Lal, the first chairman of the bank.
• On 15th April 1980 it was nationalized.
• The bank newly branches was formed in Pakistan that had to be closed down and the
registered office wa shifted from Lahore to Amritsar.
• The bank has a network of 530 branches and 505 ATMs spread throughout the India ,
and out of which 490 branches offer centralized banking solutions.

1.3 United Bank Of India

• United Bank Of India was established on 1959.
• It first branch was establish at Karachi.
• Union Bank was merged as United Bank.
• It has more than 1300 branches and it has 15 overseas branches.
• United Bank Of India has a good track record of 56 years.
• United Bank Of India has over all assets of Rs. 300 billion.

AFTER MERGER OF PUNJAB NATIONAL BANK , ORIENTED BANK

OF COMMERCE & UNITED BANK OF INDIA
st
• On 1 April 2020 Punjab National Bank(PNB) will takeover Oriental Bank Of
Commerce (OBC) and United Bank Of India (UBI) and to become the country’s
second largest lender after State Bank Of India (SBI) in terms of business and branch
network.
• The biggest chunk of recapitalisation that will go to PNB at Rs 16,000 crore ,
followed by Union Bank at Rs 11,700 crore this two anchor banks for the merger.
• The synergy after the amalgamation will create a globally competitive in the next
generation bank, PNB 2.0 the bank said that in a release and the added that all
customers, including depositors, will be treated as the PNB customers.
• PNB 2.0 will be offering specified inter-operable services through all the branches
and all the platforms including mobile and internet banking it added.
• The amalgamated bank will be a wider geographical reach through 11,000 plus
branches, more than 13,000 ATMs, 1 lakh employees and a business mix of over Rs
18

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lakh crore.
SS Mallikarjuna Rao , MD & CEO of Punjab National Bank that “The bigger geographical
footprint will help us to serve our customers more effectively and efficiently”.

The lender said that it has appointed ‘Bank Sathi’ at all the branches, zones, head office
that will address the customer concerns and assist them in choosing the right products
and services.
It will also smoothen the customer transition, it added. A robust risk governance
mechanism has been set up to mitigate risks and to make the banking experience
secure and safe, PNB noted,
PNB has unveiled a new logo following the merger of United Bank Of India and Oriental
Bank
Of Commerce with it .
The new logo will be bear distinct signages of all the three public sector lenders.

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 MERGER 3
HISTORY OF CANARA BANK & SYNDICATE BANK

1.1 Canara Bank

• Canara Bank was established on 1906 by Subba Rao Pai and it was known
Canara Hindu Parliament fund in Mangalore.
• In 1910 the bank changed its name to Canara Bank.
• In 1969 this bank was nationalized.
• In 1979 Canara Bank inaugurauted its 1000th branch.
• Canara Bank became the 1th Indian Bank to get ISO certificate in 1996 for the
‘Total Branch Banking’ for its Seshadripuram Branch in Bangalore.

1.2 Syndicate Bank

• Syndicate Bank was established on 1925 in Udupi, Karnataka it is the oldest and
major commercial banks of India. During the time of its established the bank was
known as Canara Industrial and Banking Syndicate Ltd.

• By the three visionaries Shri Upendra Ananth Pai. A businessman , Shri Vaman
Kudva, an engineer and Dr.T M A Pai, a physician with a intention to provide
financial support to the local weavers.

• Syndicate Bank was nationalized in 19 July 1969 by the government of India.

• The headquartered of this bank was in the university town of Manipal India.

• It has 13 major commercial banks of India.

• The bank objective was to primarily to extend financial assistance to the local
local weavers.

AFTER MERGER OF CANARA BANK & SYNDICATE BANK

• On 1th April 2020 , the Syndicate Bank was merged with Canara Bank.
• After the merger Canara Bank has became the India’s fourth largest public sector bank.
• Canara Bank has take over Syndicate Bank by which the shareholders pf Syndicate
Bank get 158 shares for every 1000 shares of Canara Bank.
• After merger the banks will have 10,342 branches and 12,829 ATMs and Canara
Bank also worth 15.20 lac crore.
• They has a combined strength of 91,685 employees.
• The merger of this banks shall massively enhance the reach of banking sector to the
larger public and the financial inclusion activities currently underway.
• The integration would lower operating costs because of network overlap.
• After the merger these two banks has identical work cultures, and it is possible a
seamless integration.

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 MERGER 4 HISTORY OF UNION BANK OF INDIA, ANDHRA BANK
& CORPORATION
BANK

1.1 Union Bank Of India

• Union bank of India was registered on 11th November 1919 and it has limited
company in Mumbai and it was inaugurated by Mahatma Gandhi.
• ATMs was introduced firstly in India by union bank of India.

1.2 Andhra Bank

• Andhra bank is an Indian public sector bank.
• Andhra bank was registered on 20th November 1923.
• Andhra bank was founded by the eminent freedom fighter and the multifaceted
genius, Dr. Bhogaraju Pattabhi Sitaramayya.
• It has more than 1900 branches, 15 extension counters and also more than 1100
automated teller machines.
• It has operates in 25 states and three Union Territories.
• Andhra bank has its headquarters in Hyderabad , India.
• Andhra bank has pioneer in introducing credit cards in the country in 1981.

1.3 Corporation Bank

• Corporation bank was founded in the year 1906 in Udupi in a small town of South India.
• In 1980 Corporation Bank was Nationalized and been public in 1998.
• Corporation Bank holds a unique record of posting profits right from inception.
• FY 2010-11 uninterrupted dividend payment track record since inception and
declared highest ever dividend of 200%.

AFTER MERGER OF UNION BANK OF INDIA , ANDHRA BANK

& CORPORATION BANK
st
• on 1 April 2020 Andhra Bank , Corporation Bank merge into Union Bank Of India.
• The central government is in exercise of the powers conferred by section 9 in the
banking companies Act 1970/1980 after consultation with RBI notified the
amalgamation of Andhra Bank and Corporation Bank into Union Bank Of India
Scheme 2020.
• Union Bank has become the country’s fifth largest public sector lender after
amalgamating Andhra Bank and Corporation Bank into Union Bank.
• From Wednesday the merger effective with harness rich individual legacies and forge
a dynamic shared future.
• After the merger all the employees, customers, and branches of Andhra Bank and
Corporation Bank will become the part of the Union Bank Of India .
• The merger is also the expected to generate cost and revenue synergies to the tune of
INR 2,500 crores over the next three years.
• The customers get the benefit of wider access to branches, ATMs, digital services and
credit facilities and also now in a much stronger position as a bank.

19
The banks also offers a wide range of products and services to more than 120 million
customers across its over 9,500 branches and more than 13,500 ATMs.

After combined they becomes the India’s fourth largest banking network and fifth largest
public sector bank.

In order to minimize disruption , the account numbers , IFSC codes, debit/credit cards and
internet / mobile banking portals and login credentials will remain the same.

20
 MERGER 5 HISTORY OF INDIAN BANK & ALLAHABAD BANK

1.1 Indian Bank

• On 15th August 1907 Indian Bank was established as a part of the Swadeshi movement.
• It serve the nation with a team of over 18,782, dedicated staff of total business
crossed Rs 2,11,988 crores as on 31th March 2012 , operating profit has increased to
Rs 3,463.17 crores on 31th March 2012 , Net profit has increased to Rs 1746.97
crores on 31th March 2012.
• It has also overseas branches in Singapore , Colombo including a foreign currency of
banking unit at a Colombo and Jaffna and 240 overseas correspondent banks in 70
countries.

1.2 Allahabad Bank

• In 1865 Allahabad bank was started in Allahabad and its headquarters of Allahabad
bank was in Kolkata.
• The first directors of the banks are Mr.G.Brown, Mr.T.Moss, Mr.S.Bird and Mr. A . W
. Wollaton.
• Allahabad Bank is the nationalised bank which has the more than 2500 branches
across the India.
• In the year 2013 it has the total business of 3.1 trillion and it has branches across the
world in Hong Kong and Shenzen.
• Allahabad bank is the oldest joint stock bank of the country.
• It has set up in Allahabad on 24 April 1865 by a group of Europeans.

AFTER MERGER OF INDIAN BANK & ALLAHABAD BANK

• On 1st April 2020 Allahabad Bank merger into Indian Bank.

• Finance minister Nirmala Sitharaman had announced the merger of several pubic
sector banks in Budget 2020 held in March last year.
• The Indian banks announced a share of swap ratio of 115 equity shares of Rs 10 each
for every 1,000 shares of Rs 10 each of Allahabad Bank . as per the scheme the
Allahabad Bank was amalgamated into Indian Bank along with other nine PSBs
merged into four.
• Allahabad Bank has its headquartered in Uttar Pradesh’s Allahabad initially. In
presence of Gwalior district of Madhya Pradesh 45 years ago. Now its headquarters
was later shifted to Kolkata after 20 years of establishment.
• Allahabad bank has the largest number of fixed assets as to compared with other
banks. It has the largest number of 3,230 branches across the country primarily
located in UP
, Bengal in the second position, Bihar in the third position and Madhya Pradesh at
fourth with 150 branches.
It was announced that a fair equity share exchange ratio of 115 equities of Rs 10 each for
every 1000 shares of Rs 10 of Allahabad Bank as a part of the merger of the latter in the bank.

21
 The board of directors, approved in the meeting that the share exchange ratio, subject to
• statutory and the regulatory approvals.

A grievance redressal committee headed by the retired judge of Madras High Court, Chitra
Venkataraman was formed to be address the grievances of minority of shareholders individually
and collectively holding at least one percent of the total paidup equity capital of one pf these two banks.

22
 CHATER 2
REVIEW OF LITERATURE

23
 CHATER 2
REVIEW OF LITERATURE

In this research paper it expressed the impact of SBI merger on financial condition of SBI. The SBI
will get visibility at global level in the network increase of SBI & it is also able to provide cheaper
funds more easily. The gross & net NPA of SBI it will come down after merger with their associate.
The efficiency & effectiveness of the business it will increased because of single management.

Kotnal Jaya Shree (2016)

In this research paper it expressed “the economic impact of merger and acquisition on
profitability of SBI” it various motives of merger in Indian Banking Industry. It was
compares pre and post merger financial performance of merging banks with the help of
financial parameters like gross profit margin, net profit margin, operating profit margin,
return on equity and debt equity ratio. Finally it express that the banks have been affected
positively but the overall development and financial illness of the banks can’t solved through
mergers and acquisitions.

Prof. Ritesh Patel & Dr. Dharmesh Shah(2016)

In this research paper it compared the financial performance of before and after merger of
banks through Economic value added approach and through others financial paramenter like
net profit margin, return on net worth , return on asserts, return on long term funds , interest
earnedand total assets and it is not necessary that EVA approach is common for all the other
banks. They concluded that the financial performance od bank may be improved after the
merger. Butif it past financial data are examined before merger, it can be make merger
fruitful.

Parveen Kumari(2014)
In this research paper it considered the merger and acquisition of banks as strategic approach
and told that the aim of the merger and acquisition of banks is increase credit creation and
make progressive. According to the gathered post merger data she concluded that the number
of branches & ATM, Net Profit , Deposit , Net worth have increased.

S. Devarajappa (2012)
This study is destined in identifying the various reasons for merger and acquisitions in India.
It also focused on pre and post merger performance of banks from the view point of return on
investment, ROCE, ROE. And this merger effect the helpful for surving of week banks by
merging into larger banks.

Ramon, A.A.,Onaolapo and Ajala, O. Ayorinde(2012)

In this research they examined the effects of merger and acquisition on the performance of
selected commercial banks in Nigeria . on the basis of gross earning , profit after tax and
deposit profit was chosen as financial efficiency parameters for the purpose of the study. The
findings indicated an enhanced financial performance leading to improved financial
efficiency. The 15
24
study is recommended that the banks should be more aggressive in marketing financial
products and also manpower training and re-training, investment in information technology
should be emphasized.
Azeem Ahmed Khan(2011)
In this study , the researcher focused on explain the various motives for mergers and acquisition in
India. The results of this study witnessed that mergers and acquisitions helped in declaration of
dividends to equity share holders.

Nisarg A Joshi and Jay M Desai

In this study it measured the operating performance and shareholder value of acquiring their
performance before and after the merger. The ratio analysis is used on the basis of operating profit
margin, Gross operating margin, Net Profit Margin, Return on capital employed , Return on Net
Worth, Debt-equity ratio, and EPS P/E for studying the impact. They also concluded the previous
studies , mergers do not improve performance atleast in the immediate short term.

Bhan Akhil (2009)

In this research paper it insight into the motives and benefits of the mergers in Indian banking sector.
This study examined eight merger deals of the Indian banks during the period of 1999 to 2006. The
results of the study is indicated that mergers have been efficient for the merging banks and they have
also created a value for the acquiring banks. Further it was concluded that in the Indian Banking
context the effect of mergers is not seen over a short period of time but over a considerable period of
time.

25
 CHAPTER3
RESEARCH METHODOLOGY

26
 CHAPTER 3
RESEARCH METHODOLOGY

1.1 Problem statement

• The banking industry has been experiencing major Merger and Acquisition in the recent years,
with the number of global players emerging through successive Merger and Acquisition in the
banking sectors. Only in today’s tough environment will large organizations thrive. Government
banks are in bad condition following demonetization. A lot of government banks have incurred
huge losses owing to bad loans, which the lenders have not been willing to recover because they
have ruined their company due to a range of factors, including demonetization. They have been
discussions of the closing of certain banks because, in such a case, the general public may have
withdrawn depositsfrom their accounts in a very risky circumstance. So , instead of shutting certain
banks, the government , in consultation with RBI, it has taken a brave decision to merge banks
through largescale economy operations. By merging many public sector banks into few and with
efficient resources development, banks can be reinforced with a focus on upgrading services and
revenues, optimum utilization of staff, cost efficiencies and reduced NPAs . Therefore, the study is
taken up toknow more details

1.2 Research objectives

• To study the pre and post merger financial performance of Bank OF Baroda
• To study the pre and post merger financial performance of Punjab National Banks
• To study the pre and post merger financial performance of Canara Bank
• To study the pre and post merger financial performance of Union Bank
• To study the pre and post merger financial performance of Indian Bank

1.3 Significance of the study

• The study is significant and useful as it has given the experience and knowledge about the
merger and acquisition in Indian banking sector and what are its impact on the financial
performance of the bank

1.4 Sources of data collection

• The study is purely based on secondary data taken from the annual reports of selected
units and other websites.
• All the data related to history , growth and development of selected banking industries, it
is been collected mainly from the books and magazine related to the banks and published
papers, reports, articles and from the various newspapers, and other journals.

1.5 Selection of sample

Sample size:- 3 Mega Bank Mergers List in India 2019 to 2020

Acquiring Bank Acquired Bank Year of a merger

Bank Of Baroda Vijaya Bank, April 1, 2019

Dena Bank
Punjab National Oriental Bank April 1, 2020
Bank Of
commerce,
United Bank Of India
Canara Bank Syndicate Bank April 1, 2020
Union Bank Of Andhra Bank, April 1, 2020
India Corporation Bank

Indian Bank Allahabad Bank April 1, 2020

27
1. Tools of analysis

Ratio Analysis
Ratio analysis is the important technique of financial analysis which shows the arithmetical
relationship between any two figures. A ratio , in general , is a statistical yardstick by means of
which the relationship between the figures can be compared and measured.
The ratios are operating profit ratio, net profit ratio, return on assets, return on equity ratio, cost to
income, debt equity ratio, CASA ratio,

2. Statistical Analysis
In this study mean, difference and standard deviation as tools of statistical analysis and paired t-
test for judging hypothesis.

Paired T-test
Paired t-test is the way to test the comparison between two related samples, involving small values of
n that does not require the variances of the two population to be equal, but the two population are
normal that must be continue to apply. For a paired T-test it is necessary that the observation of the

1.6 hypothesis of the

studyNull

Hypothesis:
There would be no significant difference in mean score of selected units, before and after merger
and acquisition.

Alternate Hypothesis:
There would be significant difference in mean score of selected units, before and after merger and
acquisition .

1.7 limitation of the study

• This study is purely based on only 5 selected banks.
• In this study the pre and post data of the selected merger banks are used.
• All the limitations of ratio analysis affect the study
• All the limitations of secondary data make an impact in the analysis because this study is
based on the data only
• For this study before and after merger 1 year data is been compare of selected units.

28
 CHAPTER 4
DATA ANALYSIS

29
 ACQUISITIONS
Date of Acquirer bank Target bank Assets of Number
merge target of
r bank as % branches
of of target
acquiring bank
bank’s
assets

August 2010 ICICI Bank Bank of Rajasthan 0.05 463

February
2008 HDFC Bank Centurion Bank of 20 394
Punjab
August 2007

Centurion Bank of Lord Krishna Bank 11 110

April 2007
Punjab
March 2007

October 2006 ICICI Bank Sangli Bank 0.5 190

September
2006 Indian Overseas Bank Bharat Overseas Bank 6 102

October 2005
IDBI United Western Bank 8 230
August 2004
Federal Bank Ganesh Bank of 1 32
Kurundwad
February
2003
Centurion Bank Bank of Punjab 106 136
March 2001

February
2000 Oriental Bank of Global Trust Bank 17 104
Commerce

Punjab National Bank Nedungadi Bank 2 173

ICICI Bank Bank of Madura 36 350

30
 KEY M&A DEALS 2000 ONWARDS

The cases chosen for the purpose of this study were selected based on their prominence and recency

(all post-2000) to ensure that the motives driving the deals will remain relevant in the current context.

 HDFC Bank Acquires Centurion Bank of Punjab (May '08)  HDFC bank is merged with
Centurion Bank of punjab

 New entity is named as “HDFC bank itself”.

 The merger will strengthen HDFC Bank's distribution network in the northern and the southern regions.

 HDFC Bank Board on 25th February 2008 approved the acquisition

of Centurion Bank of Punjab (CBoP) for Rs 9,510 crore

31
 CHAPTER 4
DATA
ANALYSIS
1) Operating Profit Ratio
• Operating Profit Ratio = Operating Profit/Net Sales x 100
• Operating Profit Ratio is calculated by adding non-operating expenses and
deducting non- operating income from net profit.
• It is typically measures the operating performance and the efficiency of the
company.
• The poor operational performance of the company is been analysis in which there
is higher net profit ratio but the lower operating profit ratio.
• The profit is been increased because of other income and not the due.

Table 1
Operating Profit Ratio in selected Unit

Bank Name Before After Merger (y) Difference (x-y) Square Of

Merger Difference
(x) (x-y)^2

BOB -20.82 -11.77 -9.05 81.9025

PNB -33.81 -16.61 -17.2 295.84
CB -13.30 -20.53 7.23 52.2729
UBI -23.24 -23.55 0.31 0.0961
IB -26.19 -22.83 -3.36 11.2896
Total -22.07 441.4011
(source : Moneycontrol.com)

Operating Profit Ratio

-40

-30 -33.81
-26.19
-20 -23.2-423.55 -22.83
-20.82 -20.5
-16.61
-10 -13. 3
-11.77
0
BOB PNB CB UBI IN

Before Merger After Merger

32
 Analysis

• In this above chart of operating profit ratio in which Bank Of Baroda has lower
ratio (-11.77) after the merger and it has highest ratio (-20.82) before the
merger.
• Punjab National Bank has highest ratio (-33.81) before merger and it has lower
ratio (-
16.61) after merger.
• Canara Bank has highest ratio (-20.53) after merger and it has lower ratio (-13.3)
before merger.
• Union Bank Of India has highest ratio (-26.19) before merger and it has lower ratio (-
22.83) after merger.
• Indian Bank has highest ratio (-26.19) before merger and it has lower ratio (-22.83)
after merger.

Table 1.1
Analysis of t-test in selected units under the study of operating profit ratio

N Means S.D d.f t-test p-vales Result

5 x Y xy x Y XY
-23.47 -19.05 -4.41 7.49 4.89 9.27 4 -1.064 0.347 Ho

• Null Hypothesis: (Ho)

Their would be no significant difference in mean score of selected units, before and after
merger and acquisition.

• Alternate Hypothesis: (H1)

There would be significant difference in mean score of selected units, before and after merger
and acquisition.

At 5% level of significance , here t= -1.064 and p value = 0.347

So, t<p

As t is less than p value so Null Hypothesis is (Ho) is accepted means there is no significant
difference in mean score of selected units, before and after merger & acquisition.

33
 1) Net Profit Ratio
• Net Profit Ratio = Net Profit / Net Sales x 100
• This could be measured by modified for a use by non profit entity and it can
change the net assets were it is to be used in the formula instead of net profits.
• Net Profit percentage after the tax profits to net sales. The remaining profit after
all costs of production , administration and financing have been deducted from
the sales , and income taxes recognized.
• This is the best measures of the overall result of a firm , especially when there is
combined with an evaluation of how well it is using its in working capital.
• This ratio is commonly measured reported on a trend line, to be judge
performance over all time.
• And it is also be used to compare the results of a business with their competitors.
• Net Profit is not a indicator of cash flows, and since the net profit incorporates a
number of non-cash expenses such as a accrued expenses, amortization and
depreciation.

Table 2
Net Profit Ratio in selected Unit

Bank Name Before Merger After Merger (y) Difference (x-y) Square Of
(x) Difference
(x-y)^2
BOB -5.57 0.87 -6.44 41.4736
PNB -19.44 0.62 -20.06 402.4036
CB 0.74 -4.56 5.3 28.09
UBI -8.54 -8.11 -0.43 0.1849
IB -13.60 -6.98 -6.62 43.8244
total -28.25 515.9765
(source : Moneycontrol.com)

Net Profit Rato

-25
-19.44
-20

-15 -13.6

-10 -8.54 -8.11

-6.98
-5.57
-4.56
-5
BOB PNB CB UBI IB
0
0.87 0.62 0.74
5

Before Merger After Merger

34
 • In the above chart of Net profit Ratio in which Bank Of Baroda has highest ratio
(0.87) after merger and it has lower ratio (-5.57) before the merger.
• Punjab National Bank has highest ratio (0.62) after the merger and it has lower
ratio (19.44) before the merger.
• Canara Bank has highest ratio (0.74) before the merger and it has lower ratio (-
4.56) after the merger.
• Union Bank Of India has highest ratio (-8.11) after the merger and it has lower
ratio (-
8.54) before the merger.
• Indian Bank has highest ratio (-6.98) after the merger and it has lower ratio (-13.6) before the
merger.

Table 2.1
Analysis of t-test in selected units under the study of Net profit ratio

N means S.D d.f t-test p-vales Result

X Y XY X Y XY
5 - -3.6320 - 7.69 4.19 9.438 4 -1.338 0.252 Ho
9.2820 5.65000

• Null Hypothesis: (Ho)

Their would be no significant difference in mean score of selected units, before and after
merger and acquisition.

• Alternate Hypothesis: (H1)

• There would be significant difference in mean score of selected units, before and after merger
and acquisition.
•
•
• At 5% level of significance , here t= -1.338 and p value =

0.252 So, t<p

• As t is less than p value so Null Hypothesis is (Ho) is accepted means there is no significant
difference in mean score of selected units, before and after merger & acquisition.

• Return on asset
• Return on assert = Net Income / Total Assets
• The return on assets means that how much contribution of assets is been for
generating the return.
• If more the assets is says to be the good because by the employee than more the
assets the company can be earn more return and also the ratio will be more positive.
• ROA is similar to return on equity but it doesn’t reflect the impact of a banks
leverage. Because the banks are typically leveraged by a factors of 10 to 1, in
orderto generate a 10% return on equity, that a banks must earn the equivalent of at
least1% on its assets.
• It has a long been one of the bank industry’s most commonly cited benchmarks.

35
 Bank Name Before Merger After Merger Difference (x- Square Of
(x) (y) y) Difference
(x-y)^2

BOB -0.33 0.05 -0.38 0.1444

PNB -1.28 0.04 -1.32 1.7424

Table 3
Return On Assets Ratio in selected Unit

CB 0.04 -0.30 0.34 0.1156

UBI -0.58 -0.56 -0.02 0.0004
IB -0.88 -0.45 -0.43 0.1849 (source :
total -1.81 2.1877
Moneycontrol.com)

Return On Asset
-1.4
-1.2
-1.28
-1
-0.8 -0.88
-0.6
-0.4 -0.58 -0.56
-0.45
-0.2 -0.33
BOB PNB CB-0.3 UBI IB
0
0.05 0.04 0.04
0.2
Before Merger After Merger

• In the above chart of Return On Asset Ratio, in which Bank Of Baroda has
highest ratio (0.05) after the merger and it has lower ratio (-0.33) before the
merger.
• Punjab National Bank has highest ratio (0.04) after the merger and it has lower
ratio (-
1.28) before the merger.
• Canara Bank has highest ratio (0.04) before the merger and it has lower ratio (-0.03)
after the merger.
36
• Union Bank Of India has highest ratio (-0.56) after the merger and it has lower ratio (-

37
 0.58) before the merger.
• Indian Bank has highest ratio (-0.45) after the merger and it has lower ratio (-0.88) before the
merger.

38
 Table 3.1
Analysis of t-test in selected units under the study of Return On Asset Ratio

N mea S d.f t-test Sig. Result

ns . (2tailed
D )
X Y XY X Y XY
-O.6060 -0.2440 -0.36200 0.50585 0.27952 0.61897 4 -1.308 0.261 Ho

• Null Hypothesis: (Ho)

Their would be no significant difference in mean score of selected units, before and after
merger and acquisition.

• Alternate Hypothesis: (H1)

There would be significant difference in mean score of selected units, before and after merger
and acquisition.

At 5% level of significance , here t= -1.308 and p value = 0.261

So, t<p

As t is less than p value so Null Hypothesis is (Ho) is accepted means there is no significant
difference in mean score of selected units, before and after merger & acquisition.

39
 Analysis

39
 Analysis
• In the above chart of Return On Equity Ratio , in which Bank Of Baroda has highest ratio
(0.94) after the merger and it has lower ratio (-5.60) before the merger.
• Punjab National Bank has highest ratio (0.58) after the merger and it has lower ratio (24.20)
before the merger.
• Canara bank has highest ratio (1.16) before the merger and it has lower ratio (-6.78) after the
merger.
• Union Bank Of India has highest ratio (-10.16) after the merger and it has lower ratio (-
11.92) before the merger.
• Indian Bank has highest ratio (-7.88) after the merger and it has lower ratio (-15.66) before
the merger.

Table 4.1
Analysis of t-test in selected units under the study of Return On Equity Ratio

N means S.D d.f t-test p-vales Result

X Y XY X Y XY
5 - -4.66 -6.58 9.66 5.09 11.90 4 -1.237 0.284 Ho
11.2
4


• Null Hypothesis: (Ho)

Their would be no significant difference in mean score of selected units, before and after merger
and acquisition.

• Alternate Hypothesis: (H1)

There would be significant difference in mean score of selected units, before and after merger and
acquisition.

At 5% level of significance , here t= -1.237 and p value = 0.284

So, t<p

As t is less than p value so Null Hypothesis is (Ho) is accepted means there is no significant difference
in mean score of selected units, before and after merger & acquisition.

5) Cost to Income Ratio

• Cost to Income ratio is the measurement that is been used in the company in the order to
evaluate its efficiency.
• Cost to income is usually used in the microfinance institution or bank in order to measure its
operating cost that compared to the income it generates.
• In order to have a better analysis of a company’s performance in terms of efficiency . and the
microfinance institution or bank that may need to benchmark of the ratio to the historical
period of the industry average.
• The lower cost to income ratio that is better for the company’s performance. Likewise the
lower ratio is the more efficiency of the company that can achieve in the period.
40
 • In order to reduce the cost to income of the company that needs to either increase its operating
income or reduce its operating costs. Operating costs include both personnel expenses and
administration expenses.
• Cost to Income Ratio = Operating costs / Operating Income

Table 5
Cost to Income(%) Ratio in selected Unit

Bank Name Before Merger After Merger (y) Difference (x-y) Square Of
(x) Difference
(x-y)^2
BOB 48.92 43.41 5.51 30.3601
PNB 58.80 41.81 16.99 288.6601
CB 38.78 40.83 -2.05 4.2025
UBI 45.76 46.11 -0.35 0.1225
IB 40.72 41.12 -0..4 0.16
total 20.1 323.5052
(source : Moneycontrol.com)

Cost To Income(%)
70

60

50

40

30

20

10

0
BOB PNB CB UBI IB

Before Merger After Merger

Analysis
• In this above chart of Cost To Income in which Bank Of Baroda has highest ratio (48.92)
before the merger and it has lower ratio (43.41) after the merger.
• Punjab National Bank has highest ratio (58.80) before the merger and it has lower ratio
(41.81) after the merger.
• Canara Bank has highest ratio (40.83) after the merger and it has lower ratio (38.78) before
the merger.

41
• Union Bank Of India has highest ratio (46.11) after the merger and it has lower ratio (45.76)
before the merger.

42

• Indian Bank has highest ratio (41.12) after the merger and it has lower ratio (40.72) before
the merger.

Table 5.1
Analysis of t-test in selected units under the study of Cost To Income Ratio

N Means S.D d.f t-test p-vales Result

X Y XY X Y XY
5 46.59 42.65 3..94 7.91 2.17 7.84 4 1.124 0.324 H1

• Null Hypothesis: (Ho)

Their would be no significant difference in mean score of selected units, before and after
merger and acquisition.

• Alternate Hypothesis: (H1)

There would be significant difference in mean score of selected units, before and after merger
and acquisition.

At 5% level of significance , here t= 1.124 and p-value = 0.324

So, t>p

As t is less than p value so Null Hypothesis is (Ho) is accepted means there is significant
difference in mean score of selected units, before and after merger & acquisition.
6) Earning Per Share
• Earning per share = Net income of the company / weighted average number of shares
outstanding
• Earning per share means it is generally considered to be the single most important variable in
determining a share’s price.
• A company’s profile allocated to each outstanding shares of a common stock. Earing per
share also serve as an indicator of a company’s profitability.
• An important aspect of earning per share that often to ignored is the capital that is required to
be generate the earning (net income) in the calculation.
• The two companies could be generate the same earning per share number, but only one could
do so that it will be less equity (investment) that a company would be more efficient of using
its capital to be generate income and , all other things are being equal , would be a “better”
company.

43
 Table 6
Earning Per Share Ratio in selected Unit

Bank Name Before After Merger Difference (x-y) Square Of

Merger (y) Difference
(x) (x-y)^2

BOB -64.97 -46.70 -18.27 333.7929

PNB -30.00 1.00 -31 961
CB 8.00 -24.00 32 1024
UBI -25.00 -13.00 -12 144
IB -29.00 -9.00 -20 400
total -49.27 2862.793
(source : Moneycontrol.com)

Earning Per Share Ratio

-70
-60
-50
-40
-30
-20
-10 BOB UBI
PNB CB IB
0

10
20

Before Merger After Merger

Analysis
• In the above chart of earning per share ratio , in which Bank Of Baroda has highest ratio (-
46.70) after the merger and it has lower ratio (-64.97) before the merger.
• Punjab national bank has highest ratio (1.00) after the merger and it has lower ratio (30.00)
before the merger.
• Canara Bank has highest ratio (8.00) before the merger and it has lower ratio (-24.00) after the

44
 merger.
• Union Bank Of India has highest ratio (-13.00) after the merger and it has lower ratio (-
25.00)before the merger.
• Indian Bank has highest ratio (-9.00) after the merger and it has lower ratio (-29.00) before
the merger.

45
 Table 6.1
Analysis of t-test in selected units under the study of Earning Per Share Ratio

N Means S.D d.f t-test p-vales Result

X Y XY X Y XY
- -18.34 -9.85 25.86 18.20 24.37 4 -0.904 0.417 Ho
28.19

 Null Hypothesis: (Ho)

Their would be no significant difference in mean score of selected units, before and after
merger and acquisition.

 Alternate Hypothesis: (H1)

There would be significant difference in mean score of selected units, before and after merger
and acquisition.

At 5% level of significance , here t= -0.904 and p-value = 0.417

So, t<p

As t is less than p value so Null Hypothesis is (Ho) is accepted means there is no significant
difference in mean score of selected units, before and after merger & acquisition.

5) Debt Equity Ratio

• Debt Equity Ratio = total liabilities / total shareholders equity
• Debt equity ratio is measured the company’s financial leverage calculated by
dividing the total liabilities by a stockholders’s equity. By this it indicate that what
is proportion of equity and debt of the company is using to its finance aassets.
• It is also known as the personal debt/equity ratio, and this ratio can be applied to the
personal financial statement and also as well as as corporate ones.
• “Debt” is been involes borrowing money to be repaid, plus interest. “Equity” is
been involues raising money by its selling interests in the company.
• There is a high debt/equity ratio is generally means that a company is been
aggressive in the their financing their growth with debt. And this can be result in
volatile earning as a result of an additional interest expenses.

46
 Table 7
Debt Equity Ratio in selected Unit

Bank Name Before Merger After Merger (y) Difference (x-y) Square Of
(x) Difference
(x-y)^2

BOB 15.07 15.37 -0.3 0.09

PNB 17.36 13.09 4.27 18.23
CB 21.53 20.27 1.26 1.58
UBI 18.92 16.44 2.48 6.15
IB 15.60 14.71 0.89 0.792
total 8.6 26.842
(source : Moneycontrol.com)

Debt EquityRatio
25

20

15

10

0
BOB PNB CB UBI IB

Before Merger After Merger

Analysis
• In this above chart of Debt equity ratio, in which Bank Of Baroda has highest ratio
(15.37) after the merger and lower ratio (15.07) before the merger.
• Punjab National Bank has highest ratio (17.36) before the merger and lower ratio
(13.09) after the merger.
• Canara Bank has highest ratio (21.53) before the merger and lower ratio (20.27)
after the merger.
• Union Bank Of India has highest ratio (18.92) before the merger and lower ratio

47
 (16.44) after the merger.
• Indian Bank has highest ratio (15.6) before the merger and lower ratio (14.71) after
the merger.

Table 8.1
Analysis of t-test in selected units under the study of ROCE Ratio

N Means S.D d.f t-test p-vales Result

X Y XY X Y XY
17.69 15.97 1.72 2.62 2.69 1.73 4 2.215 0.091 H1

 Null Hypothesis: (Ho)

There would be no significant difference in mean score of selected units, before and after merger

 Alternate Hypothesis: (H1)

There would be significant difference in mean score of selected units, before and after merger
and acquisition.

At 5% level of significance , here t= 2.215 and p-value = 0.091

So, t>p

As t is less than p value so Null Hypothesis is (Ho) is accepted means there is significant
difference in mean score of selected units, before and after merger & acquisition.

48
 7) ROCE (%) Ratio

• Return on Capital Employed (ROCE) that is used in finance as a measure of returns that a
company is realizing from its capital employed.
• Capital Employed is the represented as total assets minus current liabilities. In other word the
value of the assets that contribute to a company’s ability to generate revenue.
• ROCE is a ratio that indicates the efficiency and the profitability of a company’s capital
investments.
• ROCE = Earning / Capital Employed x100
• The numerator is earning before interest and tax . that the net revenue after all the operating
expenses are deducted.
• The denominator (capital employed) that denotes the sources of the funds such as equity and
short-term debt financing which is used for the day-to-day running of the company.
• It is useful measurement for comparing the relative profitability of the companies.

Table 8
ROCE(%) Ratio in selected Unit
Before After Merger (y) Difference (x-y) Square Of
Bank Name Merger Difference
(x) (x-y)^2
BOB 1.72 1.78 -0.06 0.0036
PNB 1.69 1.81 -0.12 0.0144
CB 1.56 1.32 0.24 0.0576
UBI 1.54 1.70 -0.16 0.0256
IB 1.78 2.14 -0.36 0.1296
Total -0.46 0.2308
(source : Moneycontrol.com)

ROCE
2.5

1.5

0.5

0
BOB PNB CB UBI IB

Before Merger After

49
 Analysis
• In this above chart of ROCE (%) in which Bank Of Baroda has highest ratio (1.78) after the
merger and it has lower ratio (1.72) before the merger.
• Punjab National Bank has highest ratio (1.81) after the merger and it has lower ratio (1.69)
before the merger.
• Canara Bank has highest ratio (1.56) before the merger and it has lower ratio (1.32) after the
merger.
• Union Bank Of India has highest ratio (1.70) after the merger and it has lower ratio (1.54)
before the merger.
• Indian Bank has highest ratio (2.14) after the merger and it has lower ratio (1.78) before the
merger.

Table 8.1
Analysis of t-test in selected units under the study of ROCE Ratio

N Means S.D d.f t-test p-vales Result

X Y XY X Y XY
1.65 1.75 -0.092 0.104 0.293 0.217 4 -0.948 0.397 Ho

 Null Hypothesis: (Ho)

There would be no significant difference in mean score of selected units, before and after
merger and acquisition.

 Alternate Hypothesis: (H1)

There would be significant difference in mean score of selected units, before and after merger
and acquisition.

At 5% level of significance , here t= -0.948 and p-value = 0.397

So, t<p

As t is less than p value so Null Hypothesis is (Ho) is accepted means there is no significant
difference in mean score of selected units, before and after merger & acquisition.

50
 9. Assets Turnover Ratio
• Asset Turnover Ratio = Sales Revenue / Total Assets.
• Asset turnover ratio means it include the ratio of a firm’s sales to its assets. Its
indicates that how well a firm’s assets are utilized in producing revenue.
• Assets turnover ratio takes into the account both the fixed as well as the current assets
to measure the overall efficiency in generation of the revenue with the assets
utilization.
• Higher ratio are the indicative of the efficient management and the utilisation of the
resources while low ratios are indicative of under-utilisation of the resources and
presence of idle capacity.

Table 9
Asset Turnover Ratio in selected Unit

Bank Name Before Merger After Merger (y) Difference (x-y) Square Of
(x) Difference
(x-y)^2

BOB 0.06 0.07 -0.01 0.0001

PNB 0.07 0.07 0 0
CB 0.07 0.07 0 0
UBI 0.07 0.07 0 0
IB 0.07 0.07 0 0
total -0.01 0.0001
(source : Moneycontrol.com)

Assets Turnover
0.072
0.07
0.068
0.066
0.064
0.062
0.06
0.058
0.056
0.054
BOB PNB CB UBI IB

Before Merger After Merger

Analysis
51
 • In this above chart of assets turnover ratio in which Bank Of Baroda has highest ratio
(0.07) after the merger and it has lower ratio (0.06) before the merger.

• Punjab National Bank is having equal ratio in both before and after the merger.
• Canara Bank is having equal ratio in both before and after the merger.
• Union Bank Of India is having equal ratio in both before and after the merger.
• Indian Bank is having equal ratio in both before and after the merer.

Table 9.1
Analysis of t-test in selected units under the study of Assets Turnover ratio

N Means S.D d.f t-test p-vales Result

X Y XY X Y XY
5 0.068 0.070 -0.002 0.004 0.000 0.004 4 -1.000 0.374 Ho

• Null Hypothesis: (Ho)

Their would be no significant difference in mean score of selected units, before and after
merger and acquisition.

• Alternate Hypothesis: (H1)

There would be significant difference in mean score of selected units, before and after merger
and acquisition.

At 5% level of significance , here t= -1.000 and p value = 0.374

So, t<p

As t is less than p value so Null Hypothesis is (Ho) is accepted means there is no significant
difference in mean score of selected units, before and after merger & acquisition.

10. CASA ratio

• CASA ratio means current account and saving account .
• Current Account are those account in which it is specially for customers those who have to
carry out business and the large number of transactions in the account every day.
• In current account there is no restriction on the number of transactions.
• Savings bank accounts are specially for the individual persons or jointly individual (joint
account) , which has a limit of transaction at every day.

52
 • For example when the cash withdrawn once at a day and 100 times deposition at every year.
• This account is the bank pay interest for example currency 4% interest rate on saving account.
• CASA Ratio = Deposits in Current & Saving Account / Total Deposits

Table 10
CASA Ratio in selected Unit

Bank Name Before Merger After Merger (y) Difference (x-y) Square Of
(x) Difference
(x-y)^2

BOB 35.81 35.03 0.78 0.6084

PNB 42.16 42.97 -0.81 0.6561
CB 29.18 31.37 -2.19 4.7961
UBI 35.97 35.46 0.51 0.2601
IB 35.90 36.51 -0.61 0.3721
total -2.32 6.6928
(source : Moneycontrol.com)

CASA Ratio
50
45
40
35
30
25
20
15
10
5
0
BOB PNB CB UBI IB

Before Merger After Merger

53
 Analysis.
• In this above chart in which Bank Of Baroda is having highest ratio (35.81) before the merger
and it has lower ratio (35.03) after the merger.
• Punjab National Bank is having highest ratio (42.97) after the merger and it has lower ratio
(42.16) before the merger.
• Canara Bank is having highest ratio (31.37) after the merger and it has lower ratio (29.18)
before the merger.
• Union Bank Of India has highest ratio (35.97) before the merger and it has lower ratio
(35.46) after the merger.
• Indian Bank has highest ratio (36.51) after the merger and it has lower ratio (35.90) before
the merger.

Table 10.1
Analysis of t-test in selected units under the study of CASA ratio

N Means S.D d.f t-test p-vales Result

X Y XY X Y XY
35.80 36.26 -0.464 4.59 4.21 1.184 4 -0.876 0.431 Ho

• Null Hypothesis: (Ho)

Their would be no significant difference in mean score of selected units, before and after
merger and acquisition.

• Alternate Hypothesis: (H1)

There would be significant difference in mean score of selected units, before and after merger
and acquisition.

At 5% level of significance , here t= -0.876 and p-value = 0.431

So, t<p

As t is less than p value so Null Hypothesis is (Ho) is accepted means there is no significant
difference in mean score of selected units, before and after merger & acquisition.

54
 5. BENEFITS OF MERGERS AND ACQUISITIONS

GROWTH 0R DIVERSIFICATION: -

Companies that desire rapid growth in size or market share or diversification in the range of their products may find
that a merger can be used to fulfill the objective instead of going through the tome consuming process of internal
growth or diversification. The firm may achieve the same objective in a short period of time by merging with an
existing firm. In addition such a strategy is often less costly than the alternative of developing the necessary
production capability and capacity. If a firm that wants to expand operations in existing or new product area can
find a suitable going concern. It may avoid many of risks associated with a design; manufacture the sale of addition
or new products. Moreover when a firm expands or extends its product line by acquiring another firm, it also
removes a potential competitor.

SYNERGISM: -

The nature of synergism is very simple. Synergism exists when ever the value of the combination is greater than the
sum of the values of its parts. In other words, synergism is “2+2=5”. But identifying synergy on evaluating it may
be difficult, infact sometimes its implementations may be very subtle. As broadly defined to include any
incremental value resulting from business combination, synergism in the basic economic justification of merger.
The incremental value may derive from increase in either operational or financial efficiency.

Operating Synergism: -

Operating synergism may result from economies of scale, some degree of monopoly power or increased managerial
efficiency. The value may be achieved by increasing the sales volume in relation to assts employed increasing profit
margins or decreasing operating risks. Although operating synergy usually is the result of either vertical/horizontal
integration some synergistic also may result from conglomerate growth. In addition, some times a firm may acquire
another to obtain patents, copyrights, technical proficiency, marketing skills, specific fixes assets, customer
relationship or managerial personnel. Operating synergism occurs when these assets, which are intangible, may be
combined with the existing assets and organization of the acquiring firm to produce an incremental value. Although
that value may be difficult to appraise it may be the primary motive behind the acquisition.

Financial synergism-
Among these are incremental values resulting from complementary internal funds flows more efficient use of
financial leverage, increase external financial capability and income tax advantages.

55
 The relevant provisions regarding merger, amalgamation and acquisition of banks under various acts

are discussed in brief as under:

Mergers- banking Regulation act

1949

Amalgamations of banking companies under B R Act fall under categories are voluntary amalgamation and
compulsory amalgamation.

Section 44A Voluntary Amalgamation of Banking Companies.

Section 44A of the Banking Regulation act 1949 provides for the procedure to be followed in case of voluntary

mergers of banking companies. Under these provisions a banking company may be amalgamated with another

banking company by approval of shareholders of each banking company by resolution passed by majority of two

third in value of shareholders of each of the said companies. The bank to obtain Reserve Bank‟s sanction for the

approval of the scheme of amalgamation. However, as per the observations of JPC the role of RBI is limited.

The reserve bank generally encourages amalgamation when it is satisfied that the scheme is in the interest of depositors

of the amalgamating banks.

Sector 45- Compulsory Amalgamation of banks

Under section 45(4) of the banking regulation act, reserve bank may prepare a scheme of amalgamation of a banking
company with other institution (the transferee bank) under sub- section (15) of section 45. Banking institution means any
banking company and includes SBI and subsidiary banks or a corresponding new bank. A compulsory amalgamation is a
pressed into action where the financial position of the bank has become week and urgent measures are required to be taken to
safeguard

56
CHAPTER 5

FINDINGS

57
 CHAPTER 5
FINDING

In operating profit ratio before the merger the highest ratio is (-33.81) in Punjab National
Bank and the lower ratio is (-13.30) in Canara Bank. After the merger the highest ratio is (-
23.55) in Union Bank Of India and the lower ratio is (-11.77) in Bank Of Baroda.

In net profit ratio before the merger the highest ratio is (0.74) in Canara Bank and the lowerratio is
(-19.44) in Punjab National Bank. After the merger the highest ratio is (0.87) in Bank
Of Baroda and lower ratio is (-8.11) in Union Bank Of India.

In return on assets before the merger the highest ratio is (0.04) in Canara Bank and lower ratio
is (-1.28) in Punjab National Bank. After the merger the highest ratio is (0.05) in Bank OfBaroda
and lower ratio is (-0.56) in Union Bank Of India.

In return on equity ratio before the merger the highest ratio id (1.16) in Canara Bank and the
lower ratio is (-24.20) in Punjab National Bank. After the merger the highest ratio is (0.94) inBank
Of Baroda and the lower ratio is (-10.16) in Union Bank Of India.

In cost to income ratio before the merger the highest ratio is (58.80) in Punjab National Bankand the
lower ratio is (38.78) in Canara Bank. After the merger the highest ratio is (46.11) in
Union Bank Of India and the lower ratio is (40.83) in Canara Bank.

In earning per share ratio before the merger the highest ratio is (8.00) in Canara Bank and thelower
ratio is (-64.97) in Bank Of Baroda. After the merger the highest ratio is (1.00) in Punjab
National Bank and the lower ratio is (-46.70) in Bank Of Baroda.

In debt equity ratio before the merger the highest ratio is (21.53) in Canara Bank and the lower
ratio is (15.07) in Bank Of Baroda. After the merger the highest ratio is (20.27) in Canara Bankand
the lower ratio is (13.09) in Punjab National Bank.

In ROCE ratio before the merger the highest ratio is (1.78) in Indian Bank and the lower ratiois
(1.54) in Union Bank Of India. After the merger the highest ratio is (2.14) in Indian Bank and
the lower ratio is (1.32) in Canara Bank.

In asset turnover ratio before the merger the highest ratio is (0.07) in Punjab National Bank,Canara
Bank , Union Bank Of India, and Indian Bank and the lower ratio is (0.06) in Bank Of
Baroda. After the merger the ratio(0.07) are equal in all the merged banks.

In CASA ratio before the merger the highest ratio is (42.16) in Punjab National Bank and thelower
ratio is (29.18) in Canara Bank. After the merger the highest ratio is (42.97) in Punjab
National Bank and the lower ratio is (31.37) in Canara Bank.

58
CONCLUSION

59
 CONCLUSION

The banking industry has been experiencing major Merger and Acquisition in the recent
years, with the number of global players emerging through successive Merger and
Acquisition in the banking sectors
The current study indicates that the pre and post merger and acquisition of the
selected banks in India have no grater changes in profitability ratio in a few banks that
are satisfactory during the study period. But in future there are robust projections of
improvement in profitability. So the result is to specify that the mergers led to higher
level of cost efficiencies for the merging banks.
Merger and acquisition is leads to the financial gain and the increase in price of target
banks . it is depends on the condition and the different situations that it will be
increase the share and the profit of acquirer or not.

The primary purpose of the merger and acquisition is to reduce the competition and protect in
existing markets in the economy.

Mergers are good for the growth and development of the country only when it does not
give rise to the competition issues.
Merger and Acquisition impact on the shareholder value. The asset that are the structural
factors such as relative sizes of merging the partners, technique of the financing Merger and
Acquisitions and the number of bidders in Merger & Acquisitions that have the ability to
influence the realization of a M&As success.
The administration of the banks and the other organizations that intended to undertake merger
and acquisition that should seek to evaluate and that consider how these structural factors arelikely
to impact on the achievement of the intended merger and acquisition.

Mergers has improve the competition edge of the industry in order to complete with the
competitors in the global market but the merger shrink the industry because of the number of
firms reduces.

Mergers help the banks to be strengthen their financial base and the access tax benefitsand the
direct access to cash resources.
In banking industry its helps the weaker banks to be strengthen their position by merging withthe
bigger and stronger banks.

The above study shows the impact of merger and acquisition on selected banks like
Vijaya Bank , Dena Bank merge with Bank Of Baroda, Oriental Bank of Commerce
and United Bank of India merged into Punjab National Bank, Syndicate Bank merged
with Canara Bank , Andhra Bank and Corporation Bank merged with Union Bank Of
India and Allahabad Bank merged with Indian Bank.

60
The administration of the banks and the other organizations that intended to undertake merger
and acquisition that should seek to evaluate and that consider how these structural factors are
likely to impact on the achievement of the intended merger and acquisition.

Mergers has improve the competition edge of the industry in order to complete with
the competitors in the global market but the merger shrink the industry because of the
number of firms reduces.

Mergers help the banks to be strengthen their financial base and the access tax benefits
and the direct access to cash resources.
In banking industry its helps the weaker banks to be strengthen their position by merging with
the bigger and stronger banks.
The above study shows the impact of merger and acquisition on selected banks like
Vijaya Bank , Dena Bank merge with Bank Of Baroda, Oriental Bank of Commerce
and United Bank of India merged into Punjab National Bank, Syndicate Bank merged
with Canara Bank , Andhra Bank and Corporation Bank merged with Union Bank Of
India and Allahabad Bank merged with Indian Bank

61
 Bibliography

References
• Sanjay Sharma & Sahil Sidana (2017)
• Kotnal Jaya Shree (2016)
• Prof. Ritesh Patel &Dr. Dharmesh Shah (2016)
• Parveen Kumari (2014)
• S. Devarajappa (2012)
• Ramon, A.A.Onaolapo and Ajala, O. Avorinde (2012)
• Azeem Ahmed Khan (2011)
• Nisarg A Joshi and Jay M Desai
• Bhan Akhil

Website
www.google.com
www.moneycontrol.com
www.bankofbaroda.com
www.punjabnationalbank.com
www.canarabank.com
www.unionbankofindia.com
www.indianbank.com

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