Mergers and Acquisitions, Shareholder Value Creation and Post-Integration Performance in the Indian Banking Sector
Author(s): Prof. Sudi Sudarsanam
Affiliation: School of Management, Cranfield University, Cranfield, United Kingdom
Page No: 11-13-
Volume issue & Publishing Year: Volume 3, Issue 4, 2026/04/05
Journal: International Journal of Modern Engineering and Management | IJMEM
ISSN NO: 3048-8230
DOI: ttps://doi.org/10.5281/zenodo.19508929
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Abstract:
India's banking sector consolidation — driven by the government's decision to merge 10 public sector banks into 4 larger entities (effective April 2020), HDFC Limited's merger with HDFC Bank (July 2023), and a wave of small finance bank and NBFC-bank conversions — represents the most significant structural transformation in Indian banking since nationalisation in 1969. The consolidation's strategic rationale spans capital efficiency (eliminating redundant capital requirements across subsidiary balance sheets), operational efficiency (branch network rationalisation, technology platform standardisation), credit underwriting capability (creating institutions of scale capable of large infrastructure project financing), and global competitiveness (creating Indian banks of sufficient size to compete with Asian and global banking giants in cross-border financing). This study conducts a comprehensive event study and post-merger panel analysis of 14 major Indian bank merger events from 2017 to 2024, covering PSB consolidation, private sector mergers, and selected stressed asset acquisitions. Using standard market model event study methodology (estimation window: −200 to −31 days; event window: −20 to +40 days), the study documents cumulative abnormal returns for acquirers and targets, and post-merger operating performance using NPA ratios, CASA ratios, Net Interest Margin (NIM), Cost-to-Income ratio, and Capital Adequacy Ratio (CAR) at 1-year, 2-year, and 3-year post-merger horizons. Integration success factors are identified through expert AHP (Analytic Hierarchy Process) weighting of nine integration dimensions. Cultural alignment (28%), technology integration (22%), and talent retention (18%) emerge as the three most critical success factors, consistent with the 'human side of mergers' literature but with India-specific technology integration prominence reflecting the PSB legacy system challenge.
Keywords:
bank mergers, M&A, event study, CAR, shareholder value, PSB consolidation, NPA, CASA, integration, India, HDFC, synergy, AHP
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