A

RESEARCH REPORT

ON

A STUDY ON MERGERS AND ACQUISITIONS IN INDIAN

BANKING SECTOR

SUBMITTED TO

SUBMITTED BY:

Apoorv Kaushik (77122315875)

NMIMS
(Narsee Monjee Institute of Management Studies)

Post Graduate Diploma in Business Management – Finance

MBA PROGRAMME

2022 - 24
 ACKNOWLEDGEMENT

I am pleased to submit this project titled "A Study on Mergers and Acquisitions
in the Indian Banking Sector" to the Department of Finance.

I would like to express my gratitude to my college and the Department of

Finance, as well as our director, for providing me with the opportunity to work
on this real-time project.

“It is often said that no project report can be completed without the help and
support of others, and this one is no exception.”

I am deeply grateful to my parents and family members, whose unwavering

moral and financial support has been invaluable to me.

I would also like to take this opportunity to sincerely thank all my professors.
Their teachings have provided me with the conceptual understanding and clarity
of thought that have significantly contributed to the completion of this project.
 INDEX

Sr.NO Particular

1 Chapter 1 Introduction

1.1 What is merger

1.1.1 Types of mergers
1.1.2 Reasons of mergers
1.1.3 Merits of a bank mergers
1.1.4 Demerits of a bank mergers
1.2 An over view of Indian Banking Sectors
1.3 Mega banks mergers list in India 2019 -2020
Merger-1 Bank of Baroda, Vijaya Bank & Dena Bank
Merger-2 Punjab National Bank, Oriental Bank of Commerce & United Bank of India
Merger-3 Canara Bank & Syndicate Bank
Merger-4 Union Bank of India, Andhra Bank & Corporation Bank
Merger-5 Indian Bank & Allahabad Bank

2 Review of literature

3 Research Methodology

4 Data Analysis

5 Finding & Conclusion

6 Bibliography
 CHAPTER 1 INTRODUCTION

I am pleased to present this project, titled "A Study on Mergers and Acquisitions in the Indian
Banking Sector," to the Department of Finance.
I would like to extend my heartfelt thanks to my college, the Department of Finance, and our
director for granting me the opportunity to work on this real-time project.
As the saying goes, "No project report is ever completed without the help and support of
others," and this project is no exception.
I am profoundly grateful to my parents and family members for their unwavering moral and
financial support, which has been invaluable to me.
I would also like to take this moment to sincerely thank all my professors. Their teachings have
provided me with the conceptual understanding and clarity of thought that have played a
significant role in the successful completion of this project.

1.1 What is merger

• A merger is an agreement that combines two existing companies into a single new entity.
• Mergers are typically undertaken to broaden a company’s reach, enter new market
segments, or increase market share.
• These actions are primarily aimed at satisfying shareholders and creating value.
• Mergers are governed by the Companies Act of 1856.
• The process of merging involves identifying suitable partners, agreeing on payment
terms, and ultimately forming a new company that represents the combination of both
original entities.

1.1.1 Types of mergers

Conglomerate mergers

When two or more companies engage in unrelated business activities, they may end up
operating in different industries or across various geographical regions. A pure conglomerate
merger occurs when two firms with no common interests come together. In contrast, a mixed
conglomerate merger happens between organizations that, while operating in different business
sectors, seek to achieve product or market expansion through the merger.

Congeneric Mergers

A congeneric merger, also referred to as a product extension merger, occurs when two or
more companies operate within the same market or sector and have overlapping factors such
as technology, marketing, production processes, or research and development. This type of
merger is characterized by the addition of a new product line from one company to the existing
product line of the other company.
Market Extension Mergers

When two companies that offer the same products but compete in different markets merge,
it is known as a market extension merger. This type of merger aims to access a larger market
and expand the client base.

Horizontal Mergers

When two companies operate in the same industry, competing with each other and others
offering similar products or services, a merger aims to create a larger business with a greater
market share and economies of scale. This consolidation often results in reduced competition
among fewer firms, which can lead to increased efficiency and market influence.

Vertical Mergers

When two companies that produce components or services for a specific finished product
merge, this is known as a vertical merger. A vertical merger occurs when companies operating
at different stages of the same industry's supply chain combine their operations. The primary
goal is to enhance synergies and achieve cost reductions by merging with one or more
suppliers.

1.1.2 Reasons for Bank Merger

• One major reason for bank mergers is the accumulation of bad loans over time.
• Mergers help create stronger global banks by eliminating unnecessary overlaps in
operations and infrastructure.
• Economies of scale are sought to reduce costs, which is a core objective of consolidation
efforts.
• The goal is to enhance operational efficiency, accountability, governance, and facilitate
more effective monitoring.
• Additionally, mergers aim to establish next-generation banks with a robust national
presence and global reach, alongside increased capacity to extend credit to crucial sectors
of the economy.

1.1.3 Merits of A Bank Merger

• A larger capital base allows acquiring banks to offer bigger loan amounts.
• Mergers enable the RBI to have better control over the system and facilitate easier
implementation of policies.
• Market penetration becomes more straightforward.
• Technological upgrades can be considered.
• Government recapitalization needs are reduced.
• Mergers help lower operational costs.
• Professional standards are improved.
• Mergers enhance risk management.
• Banks with regional concentrations can expand their coverage through mergers.
• Mergers improve efficiency ratios for both operational and banking activities, benefiting
the economy.
• Service delivery can be enhanced through mergers.
• The RBI will monitor bank performance, particularly focusing on Non-Performing
Assets (NPAs), or unrecovered loans.
• Customers will gain access to a broader range of products, including mutual funds and
insurance, in addition to traditional loans and deposits.
• If a bank’s NPA percentage exceeds regulatory norms, it may be required to merge with
a larger bank, thus increasing the combined capital and reducing the NPA percentage.

1.1.4 Demerits Of A Bank Merger

• Different banks have distinct cultures, systems, processes, and procedures, which can
lead to clashes in organizational culture during a merger.
• Bank officials and unions in public sector banks may oppose the merger due to
concerns about employment, job security, and tenure.
• Large, interconnected banks may pose increased financial risks to the broader
economy.
• Employees of the larger bank might not be treated equally compared to those from the
smaller bank in the merged entity.
• Small banks often have a less prominent local identity.
• Initially, customers might feel frustrated if the banks are not fully operational or if
there are delays in integrating services.
• It may take time for customers to become aware of the merger. Despite mandatory
notifications, some customers might panic upon seeing their branch's signage
replaced.
• Acquiring banks must manage the risks associated with weaker banks they absorb.
• Managing the diverse cultures and people of different banks can be challenging.
• Decentralization can be an issue, as regional banks with local customers may face
emotional responses to the acquisition.
• Large banks are more susceptible to global economic crises, which can significantly
impact the national economy if bailouts are needed.
• Frequent bank mergers can reduce customer choice.
• The governing board of the newly merged bank may face employment issues and staff
dissatisfaction, presenting additional challenges.
 INTRODUCTION

1.2 AN OVER VIEW OF INDIAN BANKING SECTORS

In the modern economy, the importance of banks cannot be overstated. The banking sector
plays a crucial role in the economic development of a country, performing essential functions
such as accepting deposits and providing loans to agricultural and industrial sectors.

Globally, the banking industry has been undergoing a transformation, paralleling a shift in the
Indian economy from manufacturing to the emerging service sector. Indian banks are adapting
to these changes, demonstrating their ability to become agile and resilient organizations.

In recent years, the banking sector has seen numerous mergers and amalgamations. The
Reserve Bank of India (RBI) and the Central Government can facilitate the consolidation of
nationalized banks or other banking entities under the Banking Companies Acts of 1970 and
1980 (Acquisition and Transfer of Undertakings).

Over the past three decades, India's banking system has achieved significant milestones,
notably its extensive reach, even to the most remote areas of the country. This widespread reach
has been a key factor in India's growth.

Previously, account holders had to wait hours at bank counters to complete transactions. Today,
banking has become much more efficient, with money transfers now as quick and easy as
sending a text message or ordering a pizza.

Since independence, banks in India have played a pivotal role in the country's socio-economic
progress. The sector has undergone significant changes due to financial sector reforms
implemented in phases.

The ongoing transformation presents an opportunity to develop a robust, strong, and vibrant
banking system capable of operating efficiently without relying on government support.

Following the liberalization of the Indian economy, the government has introduced several
reforms based on the recommendations of the Narasimhan Committee to ensure the banking
sector remains economically viable and competitively strong.
 1.3 Mega Bank Mergers List in India 2019 to 2020

Acquiring Bank Acquired Bank Year of a merger

Bank Of Baroda Vijaya Bank, Dena Bank April 1, 2019

Punjab National Bank Oriental Bank Of commerce, April 1, 2020

United Bank Of India
Canara Bank Syndicate Bank April 1, 2020
Union Bank Of India Andhra Bank, April 1, 2020
Corporation Bank
Indian Bank Allahabad Bank April 1, 2020

• On August 30, 2019, Union Finance Minister Nirmala Sitharaman announced the
consolidation of state-owned banks (PSBs), merging 10 PSBs into 4 larger institutions to
strengthen the banking sector, which was struggling with bad loans.

• The goal is to clean up bank balance sheets and create global-scale lenders capable of
supporting the economy’s growth towards a $5 trillion target by 2024.

• Building on two previous rounds of bank consolidation, this initiative aims to foster a
robust banking system and contribute to a $5 trillion economy.

• FM Sitharaman stated that the objective is to develop next-generation banks with the
capacity to enhance credit availability.

• Finance Secretary Rajiv Kumar highlighted that key factors for the mergers include
technological platforms, cultural similarities, customer reach, and competitiveness.
 MERGER 1

History of Bank of Baroda, Vijaya Bank and Dena Bank

1.1 Bank of Baroda

• On July 20, 1908, the Bank of Baroda was founded as a private bank by Maharaja
Sayajirao Gaekwad III of Baroda.
• The headquarters of the Bank of Baroda is located in Vadodara, Gujarat, formerly
known as Baroda.
• The bank’s corporate office is situated in Mumbai, Maharashtra. In 1910, the Bank of
Baroda also established a branch in Ahmedabad.
• On July 19, 1969, the Bank of Baroda was nationalized by the Government of India,
along with 13 other major commercial banks in the country.

1.2 Vijaya Bank

• Vijaya Bank was founded on October 23, 1931, by the late Shri A.B. Shetty and other
enterprising farmers from Bengaluru, Karnataka.
• On April 15, the Vijaya Bank was nationalized and has its corporate office located in
Bengaluru, Karnataka.
• The bank was recognized as a scheduled bank in 1958.
• It merged with nine smaller banks between 1968 and 1969, which contributed to its steady
growth into a major Indian bank.

1.3 Dena Bank

• Dena Bank was founded on May 26, 1938, by Devkaran Nanjee’s family under the
name Devkaran Nanjee Banking Company Ltd.
• In December 1939, the bank was renamed Dena (Devkaran Nanjee) Bank as it
transitioned to a public company.
• Dena Bank Ltd was nationalized in July 1969, along with 13 other major banks,
becoming a Public Sector Bank.
• Its headquarters are located in Mumbai, Maharashtra.

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

• On September 17, 2018, the Narendra Modi Government announced plans to merge three
public sector banks: Dena Bank, based in Mumbai; Vijaya Bank, located in Bengaluru; and Bank
of Baroda, with its headquarters in Vadodara, Gujarat.
• The merged entity will have legal assets exceeding Rs 14 lakh crore, making it India's third-
largest lender, behind the State Bank of India and HDFC Bank.
• On January 2, 2019, the Indian government approved the merger of Bank of Baroda with Vijaya
Bank and Dena Bank. Under the merger terms, shareholders of Dena Bank received 110 Bank of
Baroda shares for every 1,000 shares held, while Vijaya Bank shareholders received 402 Bank
of Baroda shares for every 1,000 shares held. The merger officially took effect on April 1, 2019.
 • The government agreed to provide Rs 5,042 crore to Bank of Baroda to enhance its financial
position following the merger.
• As a result of the merger, Bank of Baroda now ranks second in India in terms of the number of
branches. The number of banks under the RBI's prompt corrective action framework has been
reduced to four.
• Dena Bank is one of five public sector banks under PCA monitoring due to rising losses and
NPAs. According to a Moody’s report, the key credit metrics of the merged entity, excluding
profitability, will be similar to those of Bank of Baroda. However, the report also notes that Bank
of Baroda's profitability may be negatively affected by the NPAs of the other two banks. Market
reports suggest that cultural integration among the three banks could impact short-term
performance, although back-end technology integration should be relatively smooth since all
three banks use the Finacle CBS platform.
• Bank of Baroda is set to receive Rs 7,000 crore in capital.
• The primary goal of this merger was to reduce Non-Performing Assets (NPAs). At the time of
the merger proposal, the gross NPA ratios were 12.4% for Bank of Baroda, 6.9% for Vijaya Bank,
and 22% for Dena Bank. Following the merger, Bank of Baroda was projected to have 40% more
deposits and 44% more loans, along with a 70% increase in its distribution network. This
expansion is expected to provide customers with a wider range of products and services. After
the merger, the total business of Bank of Baroda is anticipated to exceed Rs 15 trillion, as
indicated by the financial analysis.

MERGER 2 HISTORY OF PUNJAB NATIONAL BANK, ORIENTAL BANK OF

COMMERCE & UNITED BANK OF INDIA
1.1 Punjab National Bank
• Punjab National Bank was established on May 19, 1894. It is an Indian multinational
banking and financial services company.
• The state-owned Punjab National Bank is headquartered in New Delhi, India.
• The bank serves over 80 million customers through 6,937 branches and 10,681 ATMs
across 764 cities. According to the RBI, Punjab National Bank has reported the highest
number of loan fraud cases among state-run banks in India.

1.2 Oriental Bank of Commerce

• Oriental Bank of Commerce was founded on February 19, 1943, in Lahore by the late
Rai Bahadur Lala Sohan Lal, the bank's first chairman.
• On April 15, 1980, the bank was nationalized.
• Following nationalization, the bank's branches in Pakistan were closed, and its
registered office was relocated from Lahore to Amritsar.
• The bank now operates a network of 530 branches and 505 ATMs across India, with
490 of the branches providing centralized banking solutions.

1.3 United Bank of India

• United Bank of India was established in 1959.
• Its first branch was set up in Karachi.
• Union Bank was merged into United Bank.
• The bank operates over 1,300 branches, including 15 international branches.
• With a track record of 56 years, United Bank of India has total assets amounting to Rs.
300 billion.
 AFTER MERGER OF PUNJAB NATIONAL BANK , ORIENTED BANK OF
COMMERCE & UNITED BANK OF INDIA

• On April 1, 2020, Punjab National Bank (PNB) will take over Oriental Bank of Commerce
(OBC) and United Bank of India (UBI), becoming the country’s second-largest lender by
business volume and branch network, following State Bank of India (SBI).
• The largest portion of recapitalization will be allocated to PNB at Rs 16,000 crore, with
Union Bank receiving Rs 11,700 crore, making these two banks central to the merger.
• The merger is expected to create a globally competitive, next-generation bank, branded as
PNB 2.0. According to a statement, all customers, including depositors, will be treated as
PNB customers.
• PNB 2.0 will offer interoperable services across all branches and platforms, including
mobile and internet banking.
• The merged bank will have an extensive geographical reach, with over 11,000 branches,
more than 13,000 ATMs, 100,000 employees, and a business portfolio exceeding Rs 18
lakh crore.
• SS Mallikarjuna Rao, MD & CEO of Punjab National Bank, stated, "The expanded
geographical footprint will enable us to serve our customers more effectively and
efficiently."
• The bank has introduced 'Bank Sathi' at all branches, zones, and the head office to address
customer concerns and assist with selecting the right products and services. This initiative
aims to facilitate a smooth transition for customers.
• Additionally, PNB has established a robust risk governance mechanism to manage risks
and ensure a secure banking experience. Following the merger with United Bank of India
and Oriental Bank of Commerce, PNB has also launched a new logo featuring distinctive
signage from all three public sector banks.

MERGER 3
HISTORY OF CANARA BANK & SYNDICATE BANK

1.1 Canara Bank

• Canara Bank was founded in 1906 by Subba Rao Pai and was originally known as the Canara
Hindu Parliament Fund in Mangalore.
• In 1910, the bank changed its name to Canara Bank.
• The bank was nationalized in 1969.
• In 1979, Canara Bank opened its 1,000th branch.
• In 1996, Canara Bank became the first Indian bank to receive an ISO certificate for ‘Total Branch
Banking’ for its Seshadripuram Branch in Bangalore.

1.2 Syndicate Bank

• Syndicate Bank was established in 1925 in Udupi, Karnataka, and is one of the oldest and
major commercial banks in India. At its inception, it was known as Canara Industrial and
Banking Syndicate Ltd.
• The bank was founded by three visionaries: Shri Upendra Ananth Pai, a businessman; Shri
Vaman Kudva, an engineer; and Dr. T M A Pai, a physician, with the aim of providing
financial support to local weavers.
 • Syndicate Bank was nationalized on July 19, 1969, by the Government of India.
• The bank's headquarters is located in the university town of Manipal, India.
• It is one of the 13 major commercial banks in India.
• The primary objective of the bank was to extend financial assistance to local weavers.

AFTER MERGER OF CANARA BANK & SYNDICATE BANK

• Syndicate Bank, one of India's oldest and major commercial banks, was established in
1925 in Udupi, Karnataka. Initially named Canara Industrial and Banking Syndicate Ltd,
it was founded by three visionaries: Shri Upendra Ananth Pai, a businessman; Shri Vaman
Kudva, an engineer; and Dr. T.M.A. Pai, a physician, with the aim of providing financial
support to local weavers.
• The bank was nationalized by the Government of India on July 19, 1969.
• Its headquarters are located in Manipal, India.
• Syndicate Bank was one of the 13 major commercial banks in India.
• The primary objective of the bank was to offer financial assistance to local weavers.
 MERGER 4 HISTORY OF UNION BANK OF INDIA, ANDHRA BANK &
CORPORATION BANK

1.1 Union Bank Of India

• Union Bank of India was established as a limited company in Mumbai on November
11, 1919, and was inaugurated by Mahatma Gandhi.
• Union Bank of India was the first to introduce ATMs in India.

1.2 Andhra Bank

• Andhra Bank is an Indian public sector bank.
• It was registered on November 20, 1923, and was founded by the distinguished freedom
fighter and multifaceted genius, Dr. Bhogaraju Pattabhi Sitaramayya.
• The bank operates over 1,900 branches, 15 extension counters, and more than 1,100
automated teller machines (ATMs).
• It has a presence in 25 states and three Union Territories.
• Andhra Bank is headquartered in Hyderabad, India.
• The bank was a pioneer in introducing credit cards in India in 1981.

1.3 Corporation Bank

• Corporation Bank was established in 1906 in Udupi, a small town in South India.
• The bank was nationalized in 1980 and became a public company in 1998.
• Corporation Bank boasts a unique record of profitability since its inception.
• For the fiscal year 2010-11, the bank maintained its uninterrupted dividend payment
track record and declared its highest-ever dividend of 200%.

AFTER MERGER OF UNION BANK OF INDIA, ANDHRA BANK &

CORPORATION BANK
• On April 1, 2020, Andhra Bank and Corporation Bank merged with Union Bank of
India.
• Exercising the powers granted by Section 9 of the Banking Companies Act 1970/1980
and after consulting with the RBI, the central government notified the amalgamation of
Andhra Bank and Corporation Bank into Union Bank of India under the Scheme 2020.
• Following the merger, Union Bank has become the country’s fifth-largest public sector
lender.
• Effective from Wednesday, the merger will integrate the rich legacies of the individual
banks and set the stage for a dynamic shared future.
• Post-merger, all employees, customers, and branches of Andhra Bank and Corporation
Bank will become part of Union Bank of India.
• The merger is expected to generate cost and revenue synergies amounting to INR 2,500
crores over the next three years.
• Customers will benefit from broader access to branches, ATMs, digital services, and
credit facilities, and the bank will be in a stronger position overall.
• The banks also offer 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.
 MERGER 5 HISTORY OF INDIAN BANK & ALLAHABAD BANK

1.1 Indian Bank

• Indian Bank was founded on August 15, 1907, as part of the Swadeshi movement.
• It serves the nation with a dedicated team of over 18,782 staff members. As of March
31, 2012, the bank's total business had surpassed Rs 2,11,988 crores. The operating
profit had risen to Rs 3,463.17 crores, and the net profit had increased to Rs 1,746.97
crores.
• Indian Bank also has overseas branches in Singapore and Colombo, including foreign
currency banking units in Colombo and Jaffna, and maintains relationships with 240
correspondent banks in 70 countries.
1.2 Allahabad Bank
• Allahabad Bank was established in 1865 in Allahabad, with its headquarters located in
Kolkata.
• The first directors of the bank were Mr. G. Brown, Mr. T. Moss, Mr. S. Bird, and Mr.
A. W. Wollaton.
• As a nationalized bank, Allahabad Bank operates more than 2,500 branches across
India.
• By 2013, the bank's total business had reached 3.1 trillion, and it maintained branches
in Hong Kong and Shenzhen.
• Allahabad Bank is the oldest joint-stock bank in the country.
• It was founded in Allahabad on April 24, 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 public
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 shares 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.
• The board of directors, approved in the meeting that the share exchange ratio, subject
to statutory and the regulatory approvals.
 CHAPTER 2

REVIEW OF LITERATURE

**Sanjay Sharma & Sahil Sidana (2017):**

This research paper discusses the impact of the SBI merger on the bank's financial condition. The
merger is expected to enhance SBI's global visibility and increase its network, making it easier for the
bank to access cheaper funds. The merger is also projected to reduce SBI's gross and net NPAs, while
improving business efficiency and effectiveness due to the consolidation under a single management.

**Kotnal Jaya Shree (2016):**

This paper explores the "economic impact of mergers and acquisitions on the profitability of SBI." It
examines various motives behind mergers in the Indian banking industry and compares the pre- and
post-merger financial performance of banks using metrics such as gross profit margin, net profit
margin, operating profit margin, return on equity, and debt-equity ratio. The study concludes that
while mergers have positively impacted the banks, they are not a comprehensive solution for the
overall development and financial health of banks.

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

This research compares the financial performance of banks before and after mergers using the
Economic Value Added (EVA) approach, alongside other financial parameters like net profit margin,
return on net worth, return on assets, return on long-term funds, interest earned, and total assets. The
study concludes that while a bank's financial performance may improve post-merger, analyzing
historical financial data before the merger can make the merger more fruitful.

**Parveen Kumari (2014):**

In this study, mergers and acquisitions of banks are considered a strategic approach to increase credit
creation and promote growth. The post-merger data analyzed shows an increase in the number of
branches, ATMs, net profit, deposits, and net worth.

**S. Devarajappa (2012):**

This study identifies various reasons for mergers and acquisitions in India and evaluates the pre- and
post-merger performance of banks in terms of return on investment (ROI), return on capital employed
(ROCE), and return on equity (ROE). The study suggests that mergers help weaker banks survive by
integrating them into larger banks.

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

This research examines the effects of mergers and acquisitions on the performance of selected
commercial banks in Nigeria, focusing on financial efficiency parameters like gross earnings, profit
after tax, and deposits. The findings indicate that mergers lead to enhanced financial performance and
improved efficiency. The study recommends aggressive marketing of financial products, investment
in information technology, and manpower training.

**Azeem Ahmed Khan (2011):**

This study focuses on the various motives for mergers and acquisitions in India. The results suggest
that mergers and acquisitions contribute to the declaration of dividends to equity shareholders.
**Nisarg A. Joshi and Jay M. Desai:**
This study measures the operating performance and shareholder value of acquiring companies before
and after mergers. Ratio analysis is used to study the impact based on metrics like operating profit
margin, gross operating margin, net profit margin, return on capital employed, return on net worth,
debt-equity ratio, and EPS P/E. The study concludes that, consistent with previous research, mergers
do not necessarily improve performance in the immediate short term.

**Bhan Akhil (2009):**

This research provides insights into the motives and benefits of mergers in the Indian banking sector.
The study examines eight merger deals involving Indian banks between 1999 and 2006, finding that
mergers have been efficient for the merging banks and have created value for the acquiring banks.
The study concludes that in the Indian banking context, the positive effects of mergers are more
evident over a longer period rather than immediately.

CHAPTER 3
RESEARCH METHODOLOGY

1.1 Problem statement

The banking industry has witnessed significant mergers and acquisitions in recent years, with numerous global
players emerging from these consolidations. In today's challenging environment, only large organizations are
likely to thrive. Government banks have faced severe challenges following demonetization, with many suffering
substantial losses due to bad loans. These losses occurred because lenders, for various reasons—including the
impact of demonetization—were unable or unwilling to recover the loans, leading to the downfall of several
companies.
There has been talk of closing certain banks as a result, which could create a risky situation where the public
might withdraw their deposits en masse. To avoid this, the government, in consultation with the RBI, made a
bold decision to merge banks, leveraging large-scale economic operations. By consolidating many public sector
banks into a few, and focusing on efficient resource development, these banks can be strengthened. This
approach aims to improve services and revenues, optimize staff utilization, increase cost efficiencies, and reduce
NPAs. This study is undertaken to explore these developments in greater detail.
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, Dena Bank April 1, 2019

Punjab National Bank Oriental Bank of commerce, April 1, 2020

United Bank of India

Canara Bank Syndicate Bank April 1, 2020

Union Bank of India Andhra Bank, April 1, 2020

Corporation Bank

Indian Bank Allahabad Bank April 1, 2020

1.6 Tools of analysis

• In this study SPSS Software is been used as statistical tool.
• This study is based on Ratio Analysis and Paired Sample T-Test 17

1.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

1.7 hypothesis of the study

Null 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.

1.8 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.

18

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 measuring 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 Merger After Merger Difference (x-y) Square Of

(x) (y) Difference
(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

-20 -26.19
-23.2-423.55 -22.83
-20.82 -20.53
-16.61
-10 -13.3
-11.77
0
BOB PNB CB UBI IN

Before Merger After Merger

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)

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= -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.

2) 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 Difference (x-y) Square Of

(x) (y) 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

21
• 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)

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= -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.

3) 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 factor of 10 to 1, in order
to generate a 10% return on equity, that a bank must earn the equivalent of at least
1% on its assets.
• It has a long been one of the bank industry’s most commonly cited benchmarks.

Table 3
Return on Assets Ratio in selected Unit

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
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
total -1.81 2.1877
(source : Moneycontrol.com)

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

23
• 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.
• Union Bank of India has highest ratio (-0.56) after the merger and it has lower ratio (-
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.

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

N means S.D d.f t-test Sig. Result

(2tailed)
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.

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
11.24

• 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= -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.
• 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- Square Of
(x) y) 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.
• Union Bank Of India has highest ratio (46.11) after the merger and it has lower ratio (45.76)
before the merger.
• 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)

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= 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

• Earnings per share = Net income of the company / weighted average number of shares
outstanding
• Earnings 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 generating 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.

Table 6
Earnings Per Share Ratio in selected Unit

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

(x) (y) y) Difference
(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 P NB CB UBI 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
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.

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)

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= -0.904 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.

7) 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 indicates 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.

27
 • “Debt” is been involes borrowing money to be repaid, plus interest. “Equity” is been
involves raising money by its selling interests in the company.
• There is a high debt/equity ratio is generally meaning that a company is been
aggressive in their financing their growth with debt. And this can be result in volatile
earning as a result of an additional interest expenses.

Table 7
Debt Equity Ratio in selected Unit

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

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

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.

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. It 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 asset’s
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- Square Of
(x) y) 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 Ratio
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
• 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.
• 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- Square Of
(x) y) 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

.
 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)

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= -0.876 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.
 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 lower
ratio 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 Of
Baroda 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) in
Bank 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 Bank
and 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 the
lower 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 Bank
and 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 ratio
is (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 the
lower 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.

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 CONCLUSION

The banking industry has seen a significant rise in mergers and acquisitions in
recent years, with numerous global players emerging through these successive
consolidations. The current study indicates that the pre- and post-merger periods
of selected banks in India have shown little change in profitability ratios, with
only a few banks displaying satisfactory results during the study period.
However, there are strong projections for improved profitability in the future,
suggesting that mergers have led to higher levels of cost efficiency for the
merging banks.

Mergers and acquisitions often result in financial gains and an increase in the
target banks' share prices, though the extent of these benefits depends on
specific conditions and circumstances, which may or may not boost the
acquirer's share and profit.

The primary purpose of mergers and acquisitions is to reduce competition and

protect existing market positions within the economy. While mergers can be
beneficial for a country's growth and development, they are only advantageous
if they do not lead to increased competition issues.

Mergers and acquisitions also impact shareholder value. Structural factors, such
as the relative sizes of merging partners, the method of financing, and the
number of bidders involved, can influence the success of mergers and
acquisitions. It is important to consider the size of a potential target and the
funding method for M&As, as these structural factors can autonomously affect
shareholder value.
Bank administrations and other organizations planning mergers and acquisitions
should carefully evaluate how these structural factors might impact the success
of the intended merger or acquisition.
While mergers can enhance the competitive edge of an industry in the global
market, they also reduce the number of firms, potentially shrinking the industry.
However, mergers strengthen banks' financial bases, provide tax benefits, and
offer direct access to cash resources. In the banking industry, mergers help
weaker banks strengthen their positions by merging with larger, stronger
institutions.
The study highlights the impact of mergers and acquisitions on specific banks,
including the merger of Vijaya Bank and Dena Bank with Bank of Baroda, the
merger of Oriental Bank of Commerce and United Bank of India into Punjab
National Bank, the merger of Syndicate Bank with Canara Bank, the merger of
Andhra Bank and Corporation Bank with Union Bank of India, and the merger
of Allahabad Bank with Indian Bank.
 Bibliography

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