Does the Future of the Indian Public Sector Banks lie in Mergers and Acquisitions?

Mallick, Indrajit (2004): Does the Future of the Indian Public Sector Banks lie in Mergers and Acquisitions? Published in: Bank Quest - The Journal of Indian Institute of Banking and Finance , Vol. 77, (1 January 2006): pp. 19-23.

Abstract

The future Indian banking industry structure will undergo some basic changes in respect of overall growth capability, risk management potential and competitive pressures. These changes, taken together, will imply an enhanced complexity in the banking industry structure and performance. In the medium and long run the Indian economy is expected to become a Global player with significant presence in World markets and lucrative rural markets. This provides an opportunity as well as a threat for the PSBs. Growth will create flexibility in asset structure, higher capital base and market share and therefore enable PSBs to generate adaptive efficiency. On the other hand, without efficient adaptation to the growth process, the PSBs cannot sustain their competitive edge and asset leverage and therefore will not be able to exploit the opportunities afforded by the domestic and the international market. The optimal strategy will depend on the special historical conditions in the operations of each bank and the comparative advantages and orientation towards future growth, competition and risk. For those banks inclined towards higher growth, organic growth will not be sufficient and has to be replaced by strategies of mergers and acquisitions.

• Item Type: MPRA Paper
• Language: English
• Keywords: Keywords: Banks, Mergers, Efficiency
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

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