Effects of Mergers and Acquisitions on Financial Performance: A Study of the Indian Banking Sector

Sakthi Ganesh S, Dr. Patcha Bhujanga Rao

Abstract: The banking sector plays a pivotal role in sustaining economic growth and financial stability. Liberalization, technological change, and global integration have pushed Indian banks toward strategic consolidation through mergers and acquisitions (M&A). These activities are intended to improve operational efficiency, expand market share, and ensure compliance with Basel III capital norms. This paper examines the conceptual and contextual foundations of M&A within the Indian banking industry, drawing from global and national experiences since the 1990s. The study highlights how mergers can generate operational, financial, and managerial synergies - yet also identifies challenges such as cultural incompatibility, integration costs, and short-term profitability fluctuations. The Indian experience demonstrates that while policy-driven consolidations (e.g., SBI and associates; Bank of Baroda?Vijaya?Dena Bank) strengthen system stability, market-driven mergers (e.g., HDFC?HDFC Ltd., Kotak?ING Vysya) pursue digital transformation and diversification. The research establishes that M&A outcomes are contingent on managerial integration, technological alignment, and macroeconomic conditions. The need for systematic empirical analysis of post-merger financial ratios such as ROA, ROE, NPM, EPS, CAR, and NPA remains critical to assessing whether consolidations truly create value and long-term financial resilience.

Keywords: Mergers and Acquisitions (M&A), Financial Performance, Indian Banking Sector, Synergy, Basel III, Profitability Ratios, Bank Consolidation

How to Cite?: Sakthi Ganesh S, Dr. Patcha Bhujanga Rao, "Effects of Mergers and Acquisitions on Financial Performance: A Study of the Indian Banking Sector", Volume 14 Issue 11, November 2025, International Journal of Science and Research (IJSR), Pages: 404-408, https://www.ijsr.net/getabstract.php?paperid=SR251106223900, DOI: https://dx.doi.org/10.21275/SR251106223900