Challenges to the Indian Banking Industry in M&a
Challenges to the Indian bank – Merger & Acquisition
Abstract
The new business environment mainly driven by globalization and liberalization has provided tremendous opportunity for the Indian banking industry to grow. The buoyant economy, deregulation and increasing consumer demand has led the banking industry growth in the recent past. But on the other hand it has also resulted in more competition and reduced margin that is forcing the Indian banks to look at consolidation as the means of increasing customer base and improve their margins. This has in turn led to an increase in the merger and acquisition activity in the recent past. This paper looks at the various opportunities and challenges faced by the Indian banks in M&A deals with more focus on HR issue.
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Introduction
Growth is the essence of any business. Every business wants to grow and grow profitably. The growth can be achieved either through the process of introducing or developing new products or by expanding or enlarging the capacity of existing products. Banks are no different to any other business in this regard. There are two broad ways of growing i.e. Organic and Inorganic growth. This paper deals with the Inorganic way of growing for the Indian banks which includes Merger & Acquisition.
Merger & Acquisition in any Sector is done mainly to achieve Synergy be it financial, operational or the management synergy. A large number of international and domestic banks are engaged in the M&A activity all over the world. Some of the common synergies that the banks look for in any M&A deal are economies of scale, increased growth in operations, reduced cost, reduced competition, use of complementary resources, robust and distributed growth etc. The Merger in banking industry is of the type of Horizontal Merger i.e. merging with those who are in the similar business.
There is a strong view in the Indian banking sector
Abstract
The new business environment mainly driven by globalization and liberalization has provided tremendous opportunity for the Indian banking industry to grow. The buoyant economy, deregulation and increasing consumer demand has led the banking industry growth in the recent past. But on the other hand it has also resulted in more competition and reduced margin that is forcing the Indian banks to look at consolidation as the means of increasing customer base and improve their margins. This has in turn led to an increase in the merger and acquisition activity in the recent past. This paper looks at the various opportunities and challenges faced by the Indian banks in M&A deals with more focus on HR issue.
___________________________________________________
Introduction
Growth is the essence of any business. Every business wants to grow and grow profitably. The growth can be achieved either through the process of introducing or developing new products or by expanding or enlarging the capacity of existing products. Banks are no different to any other business in this regard. There are two broad ways of growing i.e. Organic and Inorganic growth. This paper deals with the Inorganic way of growing for the Indian banks which includes Merger & Acquisition.
Merger & Acquisition in any Sector is done mainly to achieve Synergy be it financial, operational or the management synergy. A large number of international and domestic banks are engaged in the M&A activity all over the world. Some of the common synergies that the banks look for in any M&A deal are economies of scale, increased growth in operations, reduced cost, reduced competition, use of complementary resources, robust and distributed growth etc. The Merger in banking industry is of the type of Horizontal Merger i.e. merging with those who are in the similar business.
There is a strong view in the Indian banking sector