Mergers and Acqisitions in Banking Sector

In post reform era we have seen many mergers and acquisitions in banking sector.Mergers bring about bigger and stronger banking entities which can have better and increased reach for amassing larger volumes of business.In post reform period following bank mergrs took place--
New Bank of India,a nationalised bank was merged with Punjab National Bank.Also Nedungadi Bank Ltd ,a private sector bank was merged with Punjab National Bank.Kashinath Seth Bank was merged with State Bank of India in 1995-96.Barelly Corp.Bank ,Banares State Bank ltd and South Gujarat Local Area Bank were merged with Bank of Baroda.Times Bank was merged with centurion Bankand later with the merger of Bank of Punjab it became Centurion Bank of Punjab. Centurion Bank of Punjab has been merged with HDFC Bank.Bank of Madhura,ICICI Ltd,and Sangli Bank Ltd have been merged with ICICI Bank.Sikkim Bank Ltd was merged with Union Bank of India in 1999-2000.Global Trust Bank Ltd was merged with Oriental Bank of Commerce .United Western Bank Ltd was merged with IDBI Bank.Ganesh Bank of Kurundwad was merged with Federal Bank Ltd in 2006.Lord Krishna Bank and Bank of Muscat SAOG were merged with centurion Bank,the first after it became Centurion Bank of Punjab consequent on the amalgamation of Centurion Bank and Bank of Punjab and the second before it became Centurion Bank of Punjab i.e when it was Centurion Bank.
The government and RBI have been encouraging bank mergers in order to create larger and stronger banks and bring about a new banking order.Mergers may be synergy-based mergers to derive economies of scale ,market-driven mergers and mergers between banks and financial institutions including NBFCs in the interests of furthering universal banking.Mergers of public sector banks may also be done to create global banking institutions.Through the process of mergers it is ideal if we create 4 to 5 global banks and 10 to 15 national level players.Remaining banks can continue to function as regional banking institutions.We have seen even the merger of RRBs.State-wise and sponsor bank wise merger of RRBs has taken place.I was one of the first to recommend this type of merger of RRBs in 1993 in my article in Fortune India.[Issue of 16-31,July 1993]On account of mergers number of RRBs which was originally 196 has come down to 98.