Recent Merger of Public Sector Banks and Future Prospects

From a legal point of view, a merger is a legal consolidation of two or more entities into one, whereas an acquisition occurs when one entity takes ownership of another entity’s stock, equity interests or assets. In a major move that is set to redefine India’s banking space, Finance Minister Nirmala Sitharaman announced the merger of 10 public sector banks into four on 30-August- 2019, which will applicable from 1st April, 2020. SBI has achieved the grand success by combining its five associate banks and Bhartiya Mahila Bank to form a single entity in 2017. There are many benefits of mergers and acquisitions such as reduction in operation costs of banks, better management of NPAs, improvement in professional standards and many more. At the same time many problems are also being faced which are more emotional and social in nature than technical or managerial.