A STUDY ON MERGERS AND ACQUISITIONS IN THE INDIAN

BANKING SECTOR

GENERAL MANAGEMENT

Project submitted to

H & G H Mansukhani Institute of Management in partial fulfillment of the

requirements for
Master in Management Studies

By
Omisha Patil

Roll No: 31

Specialization: finance

Batch: 2023 - 2025

Under the guidance of

Dr Khushboo Satardekar
 H & G H Mansukhani Institute of Management
Ulhasnagar
April 2025

Student’s Declaration

I hereby declare that this report is submitted in partial fulfillment of the

requirement of MMS Degree of University of Mumbai to H. & G. H.
Mansukhani Institute of Management. This is my original work and is not
submitted for award of any degree or diploma or for similar titles or prizes.

Name: Omisha Patil

Class: symms

Roll no. :31

Place: Ulhasnagar

Date :

Students signature:
 CERTIFICATE

This is to certify that the project submitted in partial fulfillment for the award of
MMS degree of University of Mumbai to H & G H Mansukhani Institute of
Management is a result of the Bonafide research work carried out by Ms.
Omisha Patil under my supervision and guidance, no part of this report has
been submitted for award of any other degree, diploma or other similar titles or
prizes. The work has also not been published in any journals/Magazines.

Date:

Place: Ulhasnagar

Faculty Guide:

Dr. Khushboo Satardekar I/C Director

(Signature &Name of the Guide) (Prof. [Link]. Kishore Peshori)
 TABLE CONTENT

. No. Particulars Page No.

Executive Summary
1 Introduction

2.1 Introduction to the Topic

Meaning of the Concept
Rationale for Choosing the Topic
Objectives of the Study
Scope of the Study
2.2 Introduction to the Sector
2.3 Introduction to the Company
Name of the Company
Nature of the Company
Company’s Vision and Mission
Product Range
Size
Organization Structure
Market Share and Position
2 Review of Literature

3 Research Methodology
Problem Definition
Objectives
Sources of Data
Coverage of Area
Research Design
Sampling Size
 Tools of Analysis
Limitations
4 Analysis and Interpretation
5 Findings
6 Suggestions
7 Conclusions
8 Bibliography and References
 1. EXECUTIVE SUMMARY
This study explores the transformative landscape of mergers and acquisitions (M&A) within the
Indian banking sector, focusing on five significant bank mergers that have reshaped the financial
ecosystem in recent years. The primary objective is to understand the rationale behind these
mergers, assess their impact on operational efficiency, financial performance, and customer
service, and analyze the broader implications for the Indian economy.

The five mergers examined in this report are:

1. Punjab National Bank (PNB), Oriental Bank of Commerce (OBC), and United Bank
of India – Merged in April 2020 to create India’s second-largest public sector bank.

2. Union Bank of India, Andhra Bank, and Corporation Bank – Merged in April 2020,
strengthening Union Bank’s position in the Indian banking industry.

3. State Bank of India (SBI) and its five associate banks – Consolidated in 2017 to form
a globally competitive banking entity.

4. Bank of Baroda, Vijaya Bank, and Dena Bank – Merged in April 2019, becoming
India’s third-largest public sector bank.

5. ICICI Bank and Bank of Madura – A key private sector merger completed in 2001,
laying the foundation for future private bank consolidations.

These mergers were initiated with the goals of enhancing operational efficiency, expanding
geographic reach, reducing non-performing assets (NPAs), and creating stronger, more
competitive financial institutions. The study reveals that while the integration processes posed
short-term challenges, including technological alignment and workforce restructuring, the long-
term benefits include improved economies of scale, broader customer bases, and stronger
financial stability.
This report also highlights regulatory support by the Government of India and the Reserve Bank
of India (RBI), which played a crucial role in facilitating these consolidations. The analysis
indicates that strategic M&As have become vital tools for Indian banks to remain resilient in a
rapidly evolving economic environment and to align with global banking standards.

In conclusion, the study affirms that well-executed mergers and acquisitions can significantly
contribute to the robustness and global competitiveness of the Indian banking sector, provided
they are supported by sound governance, effective risk management, and a customer-centric
approach.
 CHAPTER 2. INTRODUCTION

2.1 Introduction to the Topic

In today’s dynamic and rapidly evolving financial environment, Mergers and Acquisitions
(M&A) have emerged as a key strategy for banks to strengthen their market position, enhance
efficiency, and achieve long-term sustainability. Globally, M&A activities have been extensively
used by financial institutions to increase operational scale, reduce redundancies, achieve
synergies, and diversify their portfolio of services. The Indian banking sector, being one of the
most regulated and significant components of the country's economy, has not remained
untouched by this trend.

India’s banking sector has undergone a major transformation, especially since the post-
liberalization era of the 1990s. The economic reforms, along with technological advancements,
increased customer expectations, and rising non-performing assets (npas), created a compelling
need for banks to innovate, collaborate, and sometimes consolidate. This need was further
amplified by the global financial crisis of 2008 and the banking sector crisis of the mid-2010s,
which exposed weaknesses in asset quality and capital adequacy, particularly among Public
Sector Banks (psbs).

In this context, the Government of India and the Reserve Bank of India (RBI) initiated a
series of policy reforms and guidelines to encourage consolidation among banks. The goal was to
create stronger, more stable, and competitive banks that could operate efficiently at a larger
scale, support large infrastructure projects, meet Basel III norms, and withstand external
economic shocks. Mergers were also seen as a way to streamline operations, reduce overlapping
branches, improve governance, and utilize capital more effectively.
This study aims to explore the strategic motives, execution, and impact of five major bank
mergers that significantly reshaped the Indian banking sector in recent years:

1. State Bank of India (SBI) with its five associate banks and Bharatiya Mahila Bank
(2017)
This merger created one of the largest banking entities in the world, improving
operational efficiency and branch rationalization.

2. Bank of Baroda with Dena Bank and Vijaya Bank (2019)

This was the first three-way merger of psbs in India, creating the third-largest public
sector bank.

3. Punjab National Bank with Oriental Bank of Commerce and United Bank of India
(2020)
The consolidation aimed to boost capital strength, expand outreach, and reduce npas.

4. Canara Bank with Syndicate Bank (2020)

This merger brought together two South India-based banks, enhancing regional presence
and technological synergies.

5. Union Bank of India with Andhra Bank and Corporation Bank (2020)
This move helped build a strong pan-India network, with a larger customer base and
better credit-deposit ratio.

Each of these mergers was driven by a unique set of strategic goals and presented different
challenges in terms of integration, culture, technology, and human resources. While the long-
term outcomes are still unfolding, initial trends indicate improvements in cost efficiency, digital
adoption, and branch optimization.

Through this study, a comprehensive analysis will be made of the pre- and post-merger
performance, the challenges faced during integration, the regulatory environment, and the
overall impact of these mergers on the banking industry, customers, employees, and the
economy. The research aims to provide meaningful insights into how mergers can be leveraged
as a transformative tool in the financial sector and contribute to the development of a more
resilient, inclusive, and future-ready banking ecosystem in India
Objective of the Study

The primary objectives of this study are as follows:

1. To analyze the rationale behind mergers and acquisitions (M&As) in the Indian
banking sector.

2. To examine the financial and operational performance of selected banks before and
after the merger.

3. To understand the impact of mergers on shareholders, employees, and customers.

4. To assess whether mergers have helped in achieving economies of scale, increased

efficiency, and financial stability.

5. To identify challenges faced during the merger process in Indian public and private
sector banks.
Scope of the Study

1. Geographical Scope:
The study is limited to banks operating within India, including both public and private
sector banks that have undergone mergers.

2. Time Frame:
The study focuses on mergers that took place primarily in the last 10–15 years, with a
detailed analysis of 5 specific bank mergers (e.g., SBI & Associate Banks, Bank of
Baroda merger, PNB merger, etc.).

3. Analytical Scope:

o Pre- and post-merger performance based on financial indicators such as Net

Profit, EPS, NPA ratios, and Capital Adequacy Ratio.

o Strategic and operational impact of mergers including brand value, branch

rationalization, and technological integration.

4. Limitations:

o The study is based on secondary data such as financial reports, journal articles,
RBI publications, and news sources.

o The actual long-term impact may not be fully visible yet for some recently
merged banks.
2.2 Introduction to the Sector
The Indian banking sector is one of the most critical components of the nation’s economic
infrastructure. It serves as a key driver for inclusive economic growth by facilitating capital
formation, credit distribution, financial inclusion, and overall financial stability. The
development of a robust, transparent, and efficient banking system is indispensable for a growing
economy like India, which aims to achieve a $5 trillion economy in the near future.

The structure of the Indian banking system is diverse and well-regulated. It comprises several
types of institutions including scheduled and non-scheduled banks, with the former further
classified into commercial banks and cooperative banks. Among commercial banks, public sector
banks (PSBs) dominate in terms of reach, customer base, and government backing, though
private and foreign banks also play significant roles. The entire system is regulated by the
Reserve Bank of India (RBI), which is the central bank and the apex monetary authority in India.
The RBI's role in maintaining monetary stability, enforcing banking regulations, and supervising
financial institutions is crucial in ensuring trust in the system.

Over the past three decades, the Indian banking sector has seen remarkable transformation due to
liberalization policies, technological evolution, and regulatory reforms. The post-1991 economic
reforms opened up the sector to increased competition, innovation, and market-oriented
mechanisms. Technology has played a game-changing role in banking services, ushering in core
banking systems, mobile and internet banking, Unified Payments Interface (UPI), and digital
wallets, thereby increasing outreach and convenience for consumers.

However, despite the progress, the Indian banking sector has faced persistent challenges. Key
issues include mounting non-performing assets (NPAs), low profitability of public sector banks,
fragmented market structure, duplication of resources, lack of global competitiveness, and the
need for improved corporate governance. These concerns prompted policymakers and regulators
to undertake a series of consolidation measures to strengthen the sector.

One of the most significant strategies adopted in recent years to address these issues has been the
consolidation of public sector banks through mergers and acquisitions (M&As). The objective
behind these M&As is to create fewer but stronger institutions with enhanced operational
capabilities, wider geographic presence, improved asset quality, and better capital adequacy.
Mergers are also expected to reduce redundancies, lower operational costs, improve risk
management, and ensure effective utilization of human and technological resources.
1. Rapid Evolution of the Indian Banking Sector

The Indian banking system has transformed significantly in the past few decades due to several
factors:

Technological Advancements:

• The introduction of core banking solutions (CBS), mobile banking, internet banking, and
UPI-based transactions has revolutionized the way banking services are delivered.

• Banks have adopted Artificial Intelligence (AI), Blockchain, and Big Data analytics to
enhance customer experience and fraud detection.

Digital Banking Boom:

• The rise of fintech companies and digital payment platforms (such as Paytm, Google Pay,
and phonepe) has pushed traditional banks to modernize their services.

• Government initiatives like Digital India and JAM Trinity (Jan Dhan-Aadhaar-Mobile)
have driven financial inclusion through digital banking.

Financial Inclusion Efforts:

• The Pradhan Mantri Jan Dhan Yojana (PMJDY) brought millions of unbanked
individuals into the formal banking system.

• Banks have expanded into rural and semi-urban areas to provide access to credit and
financial services.

Changing Customer Preferences:

• The demand for personalized banking experiences, instant loan approvals, and 24/7
banking services has led to a shift from traditional banking to digital-first approaches.
2. Government Initiatives in Banking Reforms

The Indian government and the Reserve Bank of India (RBI) have taken several steps to
strengthen and modernize the banking sector:

Public Sector Bank (PSB) Consolidation:

• The government has promoted mergers of weak banks with stronger ones to create
financially stable institutions.

• The merger of Vijaya Bank and Dena Bank with Bank of Baroda (2019) was one such
move to reduce npas, improve efficiency, and strengthen capital structure.

Recapitalization of Banks:

• The government has infused capital into struggling psbs to ensure they meet capital
adequacy norms and continue lending to businesses.

Banking Sector Liberalization (1991):

• Allowed the entry of private sector banks (HDFC, ICICI, Axis, etc.), increasing
competition and improving customer service.

Financial Stability and Development Council (FSDC):

• Established to monitor financial stability and risk management in banks.

3. Competitive Landscape of the Banking Sector

Public Sector Banks (psbs):

• Majority government-owned, these banks play a key role in financial inclusion and
economic stability.

• Examples: SBI, PNB, Bank of Baroda, Canara Bank.

Private Sector Banks:

• More profit-driven and customer-centric, known for advanced technology and better
customer service.

• Examples: HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank.

Foreign Banks:

• Global banks operating in India, catering to corporates, his, and trade finance needs.

• Examples: HSBC, Citibank, Deutsche Bank.

Regional Rural Banks (RRBs) & Cooperative Banks:

• Focus on rural development, small businesses, and agricultural credit.

• Examples: Maharashtra Gramin Bank, Saraswat Bank.

Non-Banking Financial Companies (nbfcs) & Fintech Firms:

• Offer microfinance, consumer credit, digital lending, and payment services.

• Examples: Bajaj Finance, Paytm, phonepe, Mobi Kwik.

4. Regulatory Framework Governing the Banking Sector

To maintain financial stability, customer protection, and systemic risk management, the Indian
banking sector is governed by stringent regulatory policies set by:

Reserve Bank of India (RBI):

 • Acts as the regulator and supervisor of the banking industry.

• Enforces monetary policies, capital adequacy norms, fraud prevention, and risk
management guidelines.

Banking Regulation Act, 1949:

• Lays down the legal framework for the functioning of banks in India.

Basel III Guidelines:

• International banking norms that Indian banks must follow to maintain capital adequacy,
liquidity management, and financial stability.

Insolvency and Bankruptcy Code (IBC), 2016:

• Helps in resolving bad loans and NPAs efficiently.

Consumer Protection Laws:

• Ensures fair banking practices, protects customers from fraud, and enhances transparency
in financial services.
Transformational Journey

Since the early 1990s, the Indian banking sector has undergone significant transformation,
largely driven by liberalization, globalization, and rapid technological advancement. These shifts
have led to improved competition, customer service, and product innovation. The introduction of
core banking solutions (CBS), mobile and internet banking, digital payment interfaces (like
UPI and NEFT), and the Digital India campaign have brought millions of previously
unbanked citizens into the formal financial system.

Despite these achievements, the sector has faced several persistent and systemic challenges:

• High levels of Non-Performing Assets (NPAs), particularly among PSBs, due to risky
lending and poor credit monitoring.

• Low profitability and capital constraints, reducing the ability of many banks to expand
credit or invest in technology.

• Fragmentation and duplication of infrastructure, leading to inefficiencies and high

operational costs.

• Weak corporate governance structures and lack of accountability in certain public

banks.

• Lagging global competitiveness, making it difficult for Indian banks to operate at scale
in international markets.

These issues not only affect bank performance but also pose risks to the broader financial
stability of the country.
The Role of Mergers and Acquisitions in Banking Reform

To address these pressing concerns, the Government of India and the RBI have actively pursued
a consolidation strategy through mergers and acquisitions (M&As), particularly within the
public sector banking segment. The rationale is to reduce the number of fragmented entities and
create fewer, but larger and stronger, banks that are capable of competing both nationally and
globally.

The strategic goals behind these M&As include:

• Improved capital adequacy ratios, in line with Basel III norms.

• Better economies of scale, reducing per-unit operational costs.

• Diversification of risk, by merging regionally focused banks into pan-India institutions.

• Enhanced lending capacity, particularly to large infrastructure and industrial projects.

• Stronger balance sheets and increased investor confidence.

• Optimization of human and technological resources, reducing redundancy and

streamlining operations.

These mergers are not merely structural changes—they are transformative policy tools aimed at
revitalizing India’s banking architecture and equipping it for future challenges and opportunities.

Scope of the Study

This project focuses on five landmark mergers in the Indian public sector banking space that
have redefined the contours of the industry:

1. Punjab National Bank (PNB) merged with Oriental Bank of Commerce and United
Bank of India in 2020.

2. Union Bank of India amalgamated with Andhra Bank and Corporation Bank in 2020.

3. Bank of Baroda merged with Vijaya Bank and Dena Bank in 2019.

4. State Bank of India (SBI) consolidated with its five associate banks and Bharatiya
Mahila Bank in 2017.
 5. Indian Bank merged with Allahabad Bank in 2020.

This study aims to explore the background, rationale, process, and implications of these mergers,
analyzing their impact on operational efficiency, employee integration, customer experience,
financial stability, and overall sectoral performance.
 2.3 Introduction to the Companies Involved

1. Introduction to the Company

The State Bank of India (SBI) is India’s largest public sector bank, with a legacy rooted in the
foundation of the Bank of Calcutta (1806), which later evolved into the Imperial Bank of
India, and was eventually nationalized to become SBI in 1955. It is a Fortune 500 company and
a key pillar in India’s banking infrastructure.

In April 2017, SBI undertook one of the largest consolidations in Indian banking history by
merging with its five associate banks and Bharatiya Mahila Bank. This strategic move was aimed
at enhancing efficiency, streamlining operations, reducing duplication, and positioning SBI as a
global banking powerhouse.

The associate banks included:

• State Bank of Bikaner & Jaipur (SBBJ)

• State Bank of Hyderabad (SBH)

• State Bank of Mysore (SBM)

• State Bank of Patiala (SBP)

• State Bank of Travancore (SBT)

• Bhartiya Mahila Bank (BMB)

2. About the Company
 • Name: State Bank of India (SBI)

• Incorporated: July 1, 1955

• Origin: Nationalization of the Imperial Bank of India under the SBI Act, 1955

• Headquarters: Mumbai, Maharashtra, India

• Chairperson (as of 2024): Dinesh Kumar Khara

• Ownership: Government of India (holds the majority stake)

• Nature of Business: Public Sector Banking and Financial Services

• Services Offered: Retail banking, Corporate banking, Investment banking, Private

banking, Asset management, Wealth management, and Insurance

SBI has a significant presence in rural, semi-urban, urban, and metropolitan areas, offering
financial inclusion and services to all segments of society. The merger helped SBI leverage
economies of scale and reduce redundancy in infrastructure, manpower, and technology.
3. Company’s Vision & Mission

Vision Statement:

"To be the bank of choice for a transforming India."

This vision reflects SBI’s ambition to be the most respected and preferred financial institution,
delivering value across all stakeholder groups.

Mission Statement:

• To provide a wide range of banking products and services that meet customer needs.

• To promote financial inclusion by expanding outreach to unbanked areas.

• To leverage technology and innovation to improve banking experience.

• To uphold high standards of corporate governance and social responsibility.

4. Organization Structure

SBI operates with a centralized yet regionally decentralized structure to balance strategic
decision-making and local responsiveness.

Top-Level Management:

• Chairman (CEO-equivalent) is the head of the bank.

• Managing Directors (MDs) oversee various verticals such as Retail Banking, Corporate
Banking, Risk, Compliance, and Global Markets.

• Deputy Managing Directors (DMDs) and Chief General Managers (CGMs) handle
regional, operational, and functional units.

Mid & Lower-Level Structure:

• General Managers (GMs) operate Circle Offices (regional HQs).

• Deputy General Managers (DGMs) and Assistant General Managers (AGMs)

manage Zones and Regions.

• Branch Managers manage retail banking operations at the grassroots level.

After the merger, SBI integrated its human resources and administrative units from associate
banks, while maintaining consistency in training, internal audits, and compliance systems.
5. Market Share & Position (Post-Merger - 2017 Onward)

The merger dramatically expanded SBI’s reach, customer base, and financial strength. Key
highlights include:

• Deposit Market Share:

SBI held approximately 22% of all bank deposits in India, making it the largest in terms
of customer funds mobilized.

• Loan Market Share:

The merged entity commanded around 20% of the total loans and advances in the Indian
banking industry.

• Branch & ATM Network:

o Over 24,000+ branches nationwide and around 200+ offices overseas.

o 59,000+ ATMs providing 24/7 access to banking services.

• Customer Base:
More than 420 million customers post-merger, making it one of the most widely
accessed banks in the world.

• Workforce:
Around 270,000 employees, forming one of the largest banking workforces globally.

• International Presence:
Operations in 36 countries with subsidiaries, branches, and joint ventures — particularly
strong in the UK, Canada, USA, UAE, and Singapore.

• Ranking:

o Became one of the Top 50 Global Banks by asset size.

o Ranked 221st on the Fortune Global 500 list (2023).

1. Introduction to the Merger

In a landmark move to strengthen the Indian banking sector, the Government of India approved
the merger of Bank of Baroda (BoB) with Vijaya Bank and Dena Bank, effective April 1,
2019. This was the first-ever three-way consolidation in Indian banking history, aimed at
creating a robust and competitive bank with economies of scale and operational efficiency.

The merger was driven by objectives such as:

• Addressing issues of weak asset quality (especially in Dena Bank),

• Enhancing credit capacity,

• Rationalizing branches,

• Reducing operational costs, and

• Leveraging technological investments across the merged banks.

This step was part of a larger banking reform strategy initiated by the Government to restructure
and consolidate public sector banks (PSBs) for better financial strength, governance, and global
competitiveness.
2. About the Companies
Bank of Baroda (BoB) – The Anchor Bank

• Founded: 1908 by Maharaja Sayajirao Gaekwad III in Baroda (now Vadodara)

• Type: Public Sector Bank (Nationalized in 1969)

• Headquarters: Vadodara, Gujarat

• Presence: Over 9,500 domestic branches and 100+ international offices

• Pre-merger Strength: Well-diversified loan portfolio, strong international presence in

countries like UAE, UK, USA, and Africa

Vijaya Bank

• Founded: 1931 in Mangalore (later moved to Bengaluru)

• Headquarters: Bengaluru, Karnataka

• Focus Area: Retail banking and SME lending

• Strength: Strong presence in South India, consistent profitability

• Legacy: Known for strong customer service and technological adoption

Dena Bank

• Founded: 1938 in Mumbai, Maharashtra

• Nationalized: In 1969 along with 13 other banks

• Focus Area: Rural and semi-urban banking, MSME and agricultural loans

• Weakness: High levels of non-performing assets (NPAs) and weak financials prior to
merger
3. Vision & Mission

Bank of Baroda (Post-merger)

Vision Statement:
“To be the most respected and referred bank providing best-in-class financial services to
customers across all segments.”

Mission Statement:

• Deliver world-class banking solutions through innovative products

• Maintain transparency, integrity, and customer centricity

• Build long-term relationships with customers, employees, and stakeholders

• Be a sustainable and responsible bank with inclusive growth

Pre-merger Visions (Summarized)

• Vijaya Bank: Aimed to become a premier and tech-savvy institution that delivers value
to all stakeholders.

• Dena Bank: Focused on becoming a trusted and service-oriented bank catering to

underbanked segments.
4. Organization Structure (Post-merger)

Following the merger, Bank of Baroda undertook a strategic integration process to unify the
three entities. Major organizational reforms included:

• Corporate Governance: A single Board of Directors overseeing the combined

operations

• Leadership Team: A dedicated Integration Management Office (IMO) established

• Headquarters: Retained in Vadodara with zonal restructuring to reduce overlaps

• Workforce: Combined strength of over 85,000 employees. A unified HR system

(HRMS) and retraining were implemented

• Branch Rationalization: Overlapping branches were merged to reduce redundancy

while enhancing service delivery

• IT Integration: Core banking platforms were aligned using BoB’s Finacle system. A
seamless transition ensured minimal disruption in customer services

5. Market Share & Competitive Position

Post-merger, Bank of Baroda emerged as a significantly larger and stronger player in the Indian
banking industry.

Parameter Post-Merger (2020)

Total Business ₹16.13+ lakh crore

Branch Network Over 9,500 branches across India

ATMs 13,000+

Customer Base Over 120 million customers

Parameter Post-Merger (2020)

Employees Approx. 85,000

Market Share ~7–8% in Indian banking sector

Position 3rd largest public sector bank in India

CASA Ratio Improved due to Vijaya Bank’s retail strength

Credit Ratings Stabilized post-merger with improved asset base

Strategic Advantages Post-merger:

• Improved pan-India reach, especially in South and Western India

• Enhanced credit disbursal capacity to large corporates and MSMEs

• Stronger capital base and cost efficiency

• Shared digital infrastructure and innovation

1. Introduction to the Company

In a significant step towards the consolidation of public sector banks, the Government of India
approved the merger of Punjab National Bank (PNB) with Oriental Bank of Commerce
(OBC) and United Bank of India (UBI), effective from April 1, 2020. This merger was part of
a broader banking sector reform strategy aimed at enhancing the strength, efficiency, and global
competitiveness of Indian banks.

The rationale behind this merger was to:

• Create larger, more robust entities capable of managing global-scale banking challenges.

• Reduce the number of weak, fragmented banks.

• Improve governance and banking infrastructure.

• Enable better risk management and technological integration.

As a result of the amalgamation, the new entity retained the name Punjab National Bank,
positioning it as:

• The second-largest public sector bank in India (after SBI).

• A bank with a global business mix of over ₹18 lakh crore.

• A customer base of more than 180 million.

This strategic move reshaped India’s financial sector by creating institutions that could better
support large-scale credit requirements, particularly for infrastructure and industry.
2. About the Companies

Punjab National Bank (PNB)

 • Year of Establishment: 1894

• Founder: Lala Lajpat Rai

• Headquarters: New Delhi

• Notable Facts:

o First Indian bank to be started solely with Indian capital.

o PNB has played a crucial role in the development of Indian banking and has
withstood various economic cycles over the years.

o Known for its strong network, customer-centric policies, and rural outreach.

o Before the merger, PNB had already merged with New Bank of India in 1993
and United Bank of India (historically) had originated from amalgamated banks
in the east.

Oriental Bank of Commerce (OBC)

• Year of Establishment: 1943

• Founder: Rai Bahadur Lala Sohan Lal

• Headquarters: Gurugram, Haryana

• Notable Facts:

o OBC focused heavily on SME lending and agricultural banking.

o Known for its financial prudence and innovative services.

o Maintained profitability for decades and emphasized community banking.

United Bank of India (UBI)

 • Year of Establishment: 1950

• Formed by merger of: Four banks in Eastern India

• Headquarters: Kolkata, West Bengal

• Notable Facts:

o UBI was highly active in the northeastern states, where few other banks had deep
reach.

o Played a major role in financial inclusion and rural banking.

o UBI was under RBI’s PCA (Prompt Corrective Action) framework prior to merger
due to weak financial health.

3. Company’s Vision & Mission

Vision Statement:

“To be the most admired and trusted bank, delivering world-class financial services with
integrity, transparency, and sustainability.”

Mission Statement:

• To offer banking solutions that meet the evolving needs of customers across segments.

• To become a financial powerhouse that supports national economic growth.

• To embrace digital transformation for improved customer experience.

• To uphold high standards of corporate governance and customer trust.

Core Values:

• Customer Centricity

• Integrity & Transparency

• Innovation & Excellence

• Commitment to Growth

• Nation First Approach

The vision and mission of the post-merger PNB reflect the Government of India’s goal of
building a next-generation bank with strong governance, financial inclusion, and digital
transformation at its core.

4. Organizational Structure
The merged entity follows a multi-layered hierarchical structure, facilitating smoother
operations, greater accountability, and strategic decision-making at each level.

Top Management:

• Chairman & Managing Director (CMD) – Oversees the strategic and operational
leadership.

• Executive Directors (EDs) – Responsible for various verticals like Retail, Corporate
Banking, HR, Risk Management, etc.

• Chief General Managers (CGMs) and General Managers (GMs) – Manage zones and
large-scale functional departments.

Zonal & Regional Structure:

• Zonal Offices: Act as regional command centers managing clusters of branches.

• Regional Offices: Coordinate with branch managers, maintain regional business targets,
and ensure service quality.

• Branch Network: Over 11,000+ branches post-merger, with reach in urban, semi-urban,
and rural areas.

Workforce:

• Combined employee base of over 1 lakh employees.

• Extensive training and integration programs post-merger to unify technology platforms

and HR systems.

5. Market Share & Position

Pre-Merger Standings:

• PNB: Already a top 3 PSU bank with a strong balance sheet.

• OBC: Mid-sized bank with healthy operational efficiency.

• UBI: Weaker financial health, but strong regional presence.

Post-Merger Highlights:

• Total Business (Deposits + Advances): ₹18+ lakh crore

• Customer Base: Over 18 crore customers

• ATM Network: Approx. 13,000+ ATMs

• Digital Footprint: Significant expansion in mobile banking, UPI, and net banking
services

• Asset Base: More than ₹11 lakh crore in assets

Geographic Reach:

• PNB's dominance in Northern India blended with UBI’s stronghold in Eastern &
Northeastern regions and OBC’s presence in Haryana & NCR, creating a pan-India
footprint.

Market Position:

• Ranked 2nd among all public sector banks (after SBI).

• Among the top 5 banks in India by total assets and branch network.

• Significantly improved market share in CASA (Current Account Savings Account)

deposits and retail lending

Introduction to the Companies

In a landmark step towards banking reform and consolidation, the Government of India

announced the merger of Syndicate Bank with Canara Bank as part of its broader public sector
banking restructuring strategy. This merger was one among several key consolidations aimed at
creating stronger, more efficient, and globally competitive banks in India.

Effective from April 1, 2020, this merger brought together two major South India-based public
sector banks, making the merged entity the fourth-largest public sector bank in India in terms
of business size. The key goals behind this strategic merger included improved operational
efficiency, optimized branch networks, stronger balance sheets, and enhanced credit delivery,
especially to priority sectors.

About the Companies

Canara Bank

• Founded: 1906 by Ammembal Subba Rao Pai in Mangalore

• Headquarters: Bengaluru, Karnataka

• Legacy & Reach: One of the oldest and most reputed public sector banks in India,
Canara Bank has a robust presence across all states and union territories, offering a wide
range of banking and financial services to individuals, businesses, and institutions.

Canara Bank is known for its digital innovation, inclusive banking approach, and strong rural
outreach. Before the merger, it already had a significant market presence with diversified
operations across retail, corporate, agriculture, MSME, and NRI banking segments.

Syndicate Bank

• Founded: 1925 in Udupi, Karnataka (as Canara Industrial and Banking Syndicate
Limited)

• Headquarters: Manipal, Karnataka

• Legacy & Strength: Syndicate Bank had a strong brand in India’s southern and coastal
regions. It played a pivotal role in grassroots banking and financial inclusion. Known for
initiatives like the Pigmy Deposit Scheme, the bank had a deep connection with small
savers and rural populations.

Prior to the merger, Syndicate Bank was among the top public sector banks in India with a wide
branch network and a strong reputation for customer service.
Vision & Mission

Since the merger, the vision and mission of Canara Bank have guided the unified operations of
the combined entity:

Vision Statement

“To emerge as a 'Preferred Bank' by pursuing global benchmarks in profitability, operational

efficiency, asset quality, risk management, and expanding the global reach.”

Mission Statement

• To provide quality banking services with a customer-centric approach.

• To enhance stakeholder value through innovation and sustained growth.

• To promote inclusive banking through rural and digital expansion.

These statements reflect the bank’s commitment to delivering value to its customers while
contributing to nation-building through financial inclusion and support for priority sectors.
Organizational Structure (Post-Merger)

The post-merger organizational structure of Canara Bank is designed for agility, governance
efficiency, and streamlined decision-making. The integration absorbed all functional areas of
Syndicate Bank into Canara Bank, with systems and processes aligned to a single core banking
platform.

Key Elements of the Structure:

• Top Leadership: The bank is governed by a Board of Directors, headed by the

Managing Director & CEO, with Executive Directors handling major verticals such as
Retail Banking, Digital Banking, Risk Management, and Operations.

• Functional Departments: Each core function such as Credit, Treasury, HR, IT, Risk,
Audit, and Compliance is led by General Managers reporting to Executive Directors.

• Zonal and Regional Offices: The bank has structured zonal and regional control offices
to manage its widespread network efficiently and provide support to branches across
geographies.

• Digital & Specialized Units: Dedicated verticals for digital innovation, MSME lending,
NRI banking, priority sector lending, and corporate finance ensure tailored solutions and
product diversification.

The transition was marked by extensive training, system integration, and HR rationalization to
ensure seamless functioning post-merger.
Market Share & Position

The merger significantly boosted Canara Bank’s scale, geographic coverage, and market
competitiveness. Key developments in its market share and strategic position include:

Market Standing:

• Rank: 4th largest Public Sector Bank in India (post SBI, PNB, and Bank of Baroda)

• Business Volume: Combined business (deposits + advances) crossed ₹16 lakh crore as
of FY 2021

• Customer Base: Over 15 crore customers, served across multiple channels

Infrastructure & Network:

• Branches: More than 10,000 branches across India, with a high density in Southern
India

• ATMs: Over 13,000+ ATMs/CDMs providing 24x7 banking services

• International Presence: Branches and representative offices in locations such as

London, Dubai, New York, and Hong Kong

Employee Base:

• Workforce: Approximately 90,000+ employees, trained in unified systems and culture

Strategic Advantages Gained Through the Merger

1. Enhanced Capital Strength:

The merger created a well-capitalized bank with better risk-handling capability and
stronger asset quality.

2. Wider Reach & Customer Base:

With merged operations, the bank now caters to a vast and diverse customer segment,
improving outreach to underbanked regions.
 3. Larger Lending Capacity:
The combined balance sheet enables the bank to fund large-ticket infrastructure and
corporate loans, supporting national development priorities.

4. Operational Efficiency & Synergies:

o Optimization of overlapping branches

o Shared digital infrastructure and back-end systems

o Reduced cost of operations through staff redeployment and technology integration

5. Digital Transformation & Innovation:

A unified digital platform allows for advanced mobile banking, AI-enabled chatbots, e-
KYC, and paperless loan processing.

6. Brand Value & Trust:

Both banks had a legacy of trust, especially in the southern regions. Their merger helped
preserve customer loyalty while scaling operations nationally.

!
1. Introduction to the Merger

In line with the Indian Government's agenda to build a robust and efficient public sector banking
system, a major consolidation was announced in August 2019, resulting in the amalgamation
of Andhra Bank and Corporation Bank into Union Bank of India. The merger officially came
into effect on April 1, 2020.

This strategic merger was part of a larger reform to reduce the number of public sector banks in
India from 27 in 2017 to just 12 by 2020, enhancing their global competitiveness and operational
viability.

Objective of the Merger:

• To create a globally competitive and scalable bank

• To rationalize overlapping operations

• To provide improved credit delivery, particularly to MSMEs, agriculture, and retail

sectors

• To improve efficiency, capital base, and risk diversification

With this merger, Union Bank of India became the fifth-largest public sector bank in India with
a broader geographic footprint and enhanced customer outreach, especially in the southern and
western regions.
2. About the Banks
Union Bank of India (Anchor Bank)

• Founded: November 11, 1919 by Mahatma Gandhi

• Headquarters: Mumbai, Maharashtra

• Ownership: 89.07% Government of India (as of 2020)

• Pre-merger Position: Mid-sized PSB with nationwide presence

• Core Areas: Retail banking, SME, agriculture, treasury, and corporate banking

• Unique Strength: Focus on digital transformation and rural outreach

Andhra Bank (Amalgamated)

• Founded: November 20, 1923

• Headquarters: Hyderabad, Telangana

• Core Strengths: Deep roots in Southern India, especially Andhra Pradesh and Telangana

• Known For: Strong focus on agriculture lending and MSME support

• Tagline: "Where India Banks"

Corporation Bank (Amalgamated)

• Founded: March 12, 1906

• Headquarters: Mangaluru, Karnataka

• Distinction: One of the oldest PSBs with innovation-led services

• Achievements: First Indian bank to publish financials even before RBI’s mandate

• Known For: Personalized customer service and early adoption of tech in banking
3. Vision & Mission Post-Merger

The merger aimed not just at combining physical infrastructure but also harmonizing the
philosophies and future aspirations of the three banks.

Vision (Post-Merger)

“To be the most admired and trusted bank, delivering innovative financial solutions and services
across all customer segments with excellence and integrity.”

Mission

• To strengthen financial inclusion through last-mile connectivity

• To innovate continuously through digital initiatives

• To offer holistic financial solutions across diverse customer profiles

• To be a responsible corporate citizen ensuring sustainability and trust

This consolidated vision and mission aims to align the bank with global standards while
supporting India's socio-economic development goals.
4. Organizational Structure

Post-merger, the organizational structure was redesigned to accommodate scale, enhance

efficiency, and foster accountability.

Top-Level Structure:

• Board of Directors: Provides overall strategic direction

• MD & CEO: Heads the bank (assisted by Executive Directors)

• Executive Directors: Lead key verticals like Retail, Credit, Technology, Compliance

• Chief General Managers (CGMs): Handle Zones, IT, Audit, Risk, and other specialized
areas

Mid & Operational-Level:

• Zonal Heads (General Managers): Supervise zonal operations

• Regional Offices (Regional Managers): Coordinate clusters of branches

• Branch Managers: Handle day-to-day retail operations

Key Integration Moves:

• Harmonization of HR policies, technology platforms, and training modules

• Centralized credit approval and risk management

• Merged core banking systems using CBS and digital unification strategies

The structure aims to support decentralized execution with centralized decision-making for
greater accountability and strategic agility.
5. Market Share & Position

The merger significantly enhanced the market footprint of Union Bank, making it a key player
in the Indian public sector banking landscape.

Post-Merger Business Highlights:

• Total Business (Deposits + Advances): ₹15.3 lakh crore

• Deposits: Over ₹8.5 lakh crore

• Advances: Around ₹6.8 lakh crore

• Branch Network: 9,500+ branches across all states and UTs

• ATM Network: Over 13,000 ATMs

• Employees: 75,000+ workforce

Market Position:

• 5th largest public sector bank in India

• One of the top 3 banks in terms of rural and semi-urban coverage

• Significant increase in customer base to over 120 million

Competitive Advantages Post-Merger:

• Enhanced geographical and demographic reach

• Diversified portfolio: Retail, corporate, MSME, agri-loans

• Strong capital adequacy ratio due to infusion by the government

• Improved cost-to-income ratio due to rationalization of overlapping functions

• Technological upgradation for seamless banking experience

 3. REVIEW OF LITERATURE

• Dr. K. Karthikeyan and V. Hema (2020): conducted a study to analyze the performance
of three financial institutions that are Bank of Baroda, Dena Bank and Vijaya Bank using
CAMEL method. This research aims to evaluate financial analysis of these banks through
Capital adequacy, Asset quality, Management efficiency, Earnings and Liquidity. The
findings of this paper reveal that to some extent mergers and acquisitions have been
successful in Indian banking sector International Journal of Research Publication and
Reviews, Vol 3, no 2, pp 1064-1070, February 2022 1065

• Dr Mubarak and Asha Barikara (2021): In their research paper, an attempt has been
made to know the impact of banks performance after merger will really give acceleration
to the economic growth rate or not. For study they have taken the data of Punjaj National
Bank, Canara Bank, Union Bank and Indian bank. The paper examines that Sick bank
survived after merger.
• Sai Kishore, Hema Divya and K.V.L. Madhav (2021): studies about the the factors that
lead to the merger of Bank of Baroda, EVijaya Bank and E Dena Bank.. Seven years
financial data before the merger decision of the three banks is collected for this analysis.
Data analysis is done using the financial tools such as Ratio Analysis and Trend Analysis.
It examines the strength of the ratios of the banks and is merger efficient and advantage in
case of BOB, Vijaya Bank and Dena bank

• . A.N. Tamra gundi and Deva Rajappa S (2016): examined the impact of mergers on
performance of selected commercial banks in India. The impact of mergers on
performance of the banks has been evaluated from three prospective. There is a
significant improvement in Deposits, Advances, Businesses and Number of Employees of
all selected banks. Therefore, this result indicates that Mergers can help commercial
banks to achieve physical performance
 4. RESEARCH METHODOLOGY
4.1 Problem Definition

The study addresses key questions:

• What were the strategic motivations for the merger?

• How did the merger impact operational efficiency and financial stability?

• In what ways did the merger affect customer satisfaction and market share?

• What were the primary challenges during the integration process?

4.2 Data Sources

• Secondary Data: Sourced from financial reports, merger-related press releases,

government documents, and existing academic research.

4.3 Coverage Area

The research focuses on:

• Branch-level Operations: Key regions where Vijay Bank and Dena Bank had a strong
presence.

• Corporate Integration: The processes and challenges faced during the merger.

4.4 Research Design

• Approach: Mixed methods, combining quantitative analysis (financial ratios, customer

satisfaction indices) and qualitative insights (managerial interviews and customer
feedback).

• Sampling Technique: Purposive sampling targeting key stakeholders to ensure that

insights are both relevant and comprehensive.

• Sample Size: Approximately 25–30 respondents, including employees, management, and

customers, ensuring a balanced perspective.
4.5 Research Instruments

• Structured Interviews: To gain in-depth qualitative insights from decision-makers and

employees.

• Questionnaires: Designed to capture quantitative data regarding operational

performance, customer satisfaction, and financial metrics.

4.6 Tools and Analysis

• Statistical Tools: Software like SPSS or Excel is used for analyzing quantitative data.

• Qualitative Analysis: Thematic analysis helps interpret interview responses and open-
ended survey questions.

4.7 Limitations

• Sample Size Constraints: The limited number of respondents may not capture the full
spectrum of experiences.

• Data Accessibility: Access to some internal documents and detailed financial data may
be restricted.

• Response Bias: Participants’ perceptions might be influenced by their personal

experiences during the merger.
 1. FINDINGS
• Strategic Fit: The merger aligns with government policies aimed at strengthening public
sector banks and achieved intended strategic synergies.

• Operational Improvements: Streamlined processes and integrated IT systems led to

measurable gains in efficiency.

• Financial Benefits: The consolidated balance sheet improved financial ratios, reduced
non-performing assets, and enhanced overall stability.

• Customer Impact: Despite initial transition challenges, customer satisfaction improved

due to a more diversified product range and better service delivery.

• Integration Issues: While challenges—particularly in cultural and technological

integration—were significant, they were largely overcome through targeted management
strategies and phased implementation.
 CHAPTER 6. SUGGESTIONS
1. Early Integration Planning
Future mergers should prioritize extensive pre-merger planning to ensure a seamless
transition. This includes aligning corporate cultures, IT infrastructures, and operational
processes well in advance. By conducting cultural assessments and IT compatibility
analyses early, organizations can mitigate potential integration challenges and enhance
overall efficiency.

2. Enhanced Communication
Transparent and consistent communication is crucial for managing stakeholder
expectations, reducing uncertainties, and fostering trust. A well-structured
communication strategy should include regular updates for employees, customers,
investors, and other key stakeholders. Utilizing multiple channels such as town hall
meetings, newsletters, and digital platforms can help ensure clarity and engagement
throughout the transition process.

3. Continuous Monitoring
Post-merger integration requires ongoing evaluation of financial and operational metrics
to track progress and identify potential issues early. Regular performance reviews, key
performance indicator (KPI) tracking, and real-time reporting mechanisms can help
leadership make informed decisions. This proactive approach enables timely corrective
actions, ensuring the merger delivers its intended value.

4. Employee Training and Change Management

Effective change management strategies, coupled with comprehensive training programs,
play a critical role in ensuring a smooth transition for employees. Organizations should
invest in workshops, leadership coaching, and skill development programs to help
employees adapt to new processes, technologies, and corporate cultures. Addressing
employee concerns proactively fosters engagement, reduces resistance to change, and
enhances overall productivity.

5. Customer-Centric Strategies
Maintaining high customer satisfaction during and after a merger is essential for long-
term success. Organizations should implement structured feedback loops, personalized
customer outreach programs, and service enhancements to ensure minimal disruptions.
By proactively addressing customer concerns and continuously improving service quality,
businesses can retain loyalty and strengthen brand reputation throughout the integration
process.
 CHAPTER 7. CONCLUSION

The merger of Vijay Bank and Dena Bank into Bank of Baroda serves as an instructive case of
how strategic consolidation can enhance operational efficiency, financial stability, and market
competitiveness in the banking sector. While the process entailed significant challenges—
particularly in aligning diverse corporate cultures and integrating disparate IT systems—the
long-term benefits have been substantial. This study illustrates that with careful planning, clear
communication, and continuous performance monitoring, large-scale mergers can successfully
transform and strengthen the public banking landscape.

The merger of Vijaya Bank and Dena Bank with Bank of Baroda serves as a compelling case study
of how strategic Mergers and Acquisitions (M&A) in the banking sector can drive enhanced
financial stability, operational efficiency, and market competitiveness. While the consolidation
process involved several challenges—particularly in aligning corporate cultures, integrating IT
systems, and managing stakeholder expectations—the long-term benefits have been significant.

1. Strengthened Financial Position

o The merger helped increase the capital base and lending capacity of the
consolidated entity, positioning it as India’s third-largest public sector bank.

o The diversification of the loan portfolio reduced risk exposure and improved asset
quality management, particularly beneficial for Dena Bank, which was under the
Prompt Corrective Action (PCA) framework prior to the merger.

2. Enhanced Operational Efficiency

o The integration led to a wider customer base, an expanded branch and ATM
network, and improved resource allocation.

o IT system upgrades and digital banking enhancements streamlined banking

operations, reducing redundancies and boosting service efficiency.

3. Challenges Overcome Through Strategic Planning

 o The successful harmonization of diverse organizational cultures and workforce
structures demonstrated the importance of change management initiatives and
employee training programs.

o A well-structured communication strategy played a crucial role in gaining

employee and customer trust, ensuring a smooth transition.

4. Impact on the Indian Banking Sector

o This merger set a precedent for future consolidations in the public sector banking
space, demonstrating that with careful planning and execution, M&A can be a
powerful tool for strengthening the financial system.

o The merger contributed to the government's broader goal of creating stronger and
more competitive public sector banks capable of supporting India’s economic
growth.

Mergers and Acquisitions in the banking sector, when executed strategically, can enhance financial
stability, operational efficiency, and overall service quality. The Vijaya Bank and Dena Bank
merger into Bank of Baroda showcases how pre-merger planning, effective communication,
technological integration, and continuous monitoring are essential for a successful transition.
While challenges are inevitable, this case study highlights that a well-managed merger can result
in a more resilient and competitive banking institution, ultimately benefiting customers,
employees, and the broader economy.
 CHAPTER 8. BIBLIOGRAPHY
A comprehensive bibliography would include:

• Government Reports: Publications by the Reserve Bank of India and Ministry of

Finance detailing consolidation policies.

• Academic Journals: Research articles on mergers and acquisitions in the banking sector.

• Financial Reports: Annual reports and financial disclosures from Bank of Baroda, Vijay
Bank, and Dena Bank.

• Press Releases and News Articles: Coverage documenting the merger process and
subsequent performance analysis.

• Books and Case Studies: Works on strategic management and change management in
banking mergers.