A Study On Merger and Acquisitions in The Indian Banking Sector

A Study on Merger and Acquisition in the Indian Banking Sector
(Case Study on Bank of Baroda, Vijaya Bank and Dena Bank)

Submitted to
UNIVERSITY OF MUMBAI
For partial completion of the degree of
Bachelor in commerce (Accounting and Finance)
Under the faculty of commerce
By
ALEENA EUGEBIO ANTAO
Under the guidance of
Prof. MACNOBLE M DRUZ
St GONSALO GARCIA COLLEGE OF ARTS & COMMERCE
VASAI (W), PALGHAR- 401201
ACADEMIC YEAR 2021-2022

DECLARATION
I the undersigned Ms. ALEENA EUGEBIO ANTAO herby, declare that the work
embodied in this project work title forms "A STUDY ON MERGER AND
ACQUISITION IN THE INDIAN BANKING SECTOR" own contribution to
the research work carried out under the guidance of PROF MACNOBLE M
DRUZ is a result of my own research work and has not been previously submitted
to any other university for any other degree to this or any other university to this or
any other university.
Whenever reference has been made to previous works of others, it has been clearly
indicated as much as included in the bibliography.
I, hereby further declare that all information of this document has been obtained
and presented in accordance with academic rules and ethical conduct.
ALEENA EUGEBIO ANTAO
Certified by:-
Prof. MACNOBLE M DRUZ

Certificate
This is to certify that MS. ALEENA EUGEBIO ANTAO student of B.com

(Accounting and Finance) Semester VI (2021-2022) has successfully completed
the project on "A STUDY ON MERGER AND ACQUISITION IN THE
INDIAN BANKING SECTOR" under guidance of Prof. MACNOBLE
M.DRUZ
________________ _________________
PRINCIPAL CO - ORDINATOR
(DR. SOMNATH VIBHUTE)
________________ _________________
PROJECT GUIDE EXTERNAL EXAMINER
INTERNAL EXAMINER
(PROF. MACNOBLE M.DRUZ)

ACKNOWLEDGEMENT
To list of who have helped me is difficult because they are so numerous and the
depth is so enormous.
I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me chance to
do this project.
I would like to thank my PRINCIPAL, DR. SOMNATH VIBHUTE for

providing the necessary facilities required for completion of this project.
I take this opportunity to thank our CO-ORDINATOR Prof. RUBINA

D'MELLO, for her/his moral support and guidance.
I would also like to express my sincere gratitude towards my project guide Prof.
MACNOBLE M. DRUZ whose guidance and care make the project successful.
I would like to thank my College Library, for having provided various reference
books and magazines related to my project.
Lastly, I would like to tank each and every person who directly or indirectly helped
me in the completion of the project especially My Parents and Peers who
supported me throughout my project.
Sr no Index Pg no
1 Chapter 1. Introduction
1.1 Meaning 1
1.2 Historical Background 1-2
1.3 Objectives 2
1.4 Advantages 3
1.5 Disadvantages 3
1.6 Types of Merger 3-5
1.7 Purpose of Merger 5-6
1.8 Forms of Merger 6
1.9 Strategic Alliances
1.9.1 Meaning 6-7
1.9.2 Reason of Strategic Alliance 7
1.9.3 Types of Strategic Alliances 7-9
1.9.4 Structure of Strategic Alliances 10-11
1.9.5 Problems in Indian Strategic Alliance/Joint Ventures 11-12
Research methodology
1.10 Need to Study 12-13
1.11 Scope 13
1.12 Reason 13-14
1.13 Procedure of Merger 14-16
1.14 Data Collection 16
2 Chapter 2. review of literature 17-18
3 Chapter 3. Profile of Company
3.1 History 19
3.1.1 Bank of Baroda 19-21
3.1.2 Vijaya Bank 22
3.1.3 Dena Bank 23
3.2 Reason for Merger of BOB, Vijaya Bank, Dena Bank 24
3.3 Importance 24-25
3.4 Why do Bank Merge 26-27
3.5 Impact
3.5.1 Impact on Employees 27-28
3.5.2 Impact on Shareholders 28
3.5.3 Impact on Customers 28-29
3.6 Rules & Regulations 29-36
4 Chapter 4. Data Analysis 37-49
5 Chapter 5
5.1 Conclusion 50-53
5.2 Suggestion 53
6 Chapter 6. Bibliography 54
Abstract:
In recent years there are many banks which were merged. It has left unfavorable impact on the
Indian economy. Merger means merging of two companies into one new company whereas in
acquisitions a company takes over another company. This research study aims at how merger
takes place and its importance in the strategic planning. The report is divided into seven chapters.
The 1st chapter, by the way is introduction. It contains detail information about merger &
acquisition and its effects. 2nd chapter is all about need, scope, reason, and procedure. Chapter 3rd
contains review of literature of the project. Chapter 4th includes in depths of the company like
history, importance and its impact. Chapter 5th includes analyzing of various banks. Chapter 6th
contains brief information about the project. 7th and the final chapter
A Study On Merger And Acquisition In The Indian Banking Sector
Chapter 1: Introduction
1.1 MEANING
1.1.1 MERGERs
Merger refers to a situation when two or more existing firms combing together and form a new
entity. Either a new company may be incorporated for this purpose or one existing company
(generally a bigger one) survives and another existing company (which is smaller) is merged into
it.
1.1.2 Acquisition
Acquisition refers to the acquiring ownership right in the property and asset without any
combination of companies. Thus in acquisition two or more companies may remain independent,
separate legal entity but there may be change in control of companies. Acquisition results when
one company purchases the controlling interest in the share capital of another existing company
in any of the following ways:
(a) By controlling interest in the other company. By entering into an agreement with a person or
person holding shares of other company.
(b) By subscribing new shares being issued by the other company.
(c) By purchasing shares of the company at a stock exchange; and
(d) By making an offer to buy the shares of the company to the existing shareholders of the
company.
The company acquiring controlling interest is termed as the holding company while the company
in which the shares are acquired is termed as the subsidiary company
1.2 Historical Background
In the 50 years since nationalisation to this most recent round last week, India has witnessed 53
mergers, mostly that of failed banks being merged with good banks. While we have seen mergers
TYBAF 1 St gonsalo Garcia college

every decade, there‟s been a sharp jump in recent years. 16 mergers have been announced in the
last 20 months, that is between 2017 and 2019
Banks Mergers Since 1969 Nationalisation
Years Banks of India Merged

1970 6
1980 6
1990 8
2000 11
2010 19
2017 6
2019 10
Total 53
From the total of 53 banks which were merged since 1969. Out of that 12 were merged with SBI
(seven were SBI associates) followed by five banks each that were merged with Bank of Baroda
and Punjab National Bank.
Journey From 1969 Nationalisation To 2019 Mergers
From the 14 banks which were nationalized by Prime Minister Indira Gandhi, 10 banks were
able to retain their identity. Around 1980 i.e. after 11 years later six more banks were
nationalized by prime minister
1.3 Objectives
1. To study the impact of merger and acquisitions on the indian economy.
2. To understand the effects of merger pre and post pandemic.
3. To know about the merger between Bank of Baroda, Dena Bank and Vijaya Bank.
4. To understand the purpose of merger and acquisitions
5. To know about the benefits of merger and acquisitions
6. To understand the banking awareness regarding mergers and acquisition.

1.4 Advantages of mergers and acquisitions
1. It helps to reduce cost of operation.
2. It helps to improve the financial inclusion.
3. It increases the chance to entry in the global market.
4. It helps to manage the working capital of the bank in a better way.
5. Provides the better efficiency ratio for operations as well as banking operations which is
beneficial for the economy.
6. It helps to improve customer base which in short will increase the goodwill of the bank.
7. There will be a proper utilization of excess cash.
8. It will help to improve the professional standard.
1.5 Disadvantages of mergers and acquisitions

1. Acquiring bank has to bear the burden of the weaker bank, for eg: payment of
tax.
2. There is a chance of a bank going bankrupt again.
3. Merging with a weaker bank where fraud has taken place can increase the risk of fraud in the
acquiring bank.
4. It can be very challenging to manage the people and culture of different banks.
5. It can be difficulty in governing the issues.
6. It will affect the general public as the cheques books, credit cards might change.
7. Different interest rates can affect the working of the bank.
8. If there are a lot of branches in the same area after the merger, then some branches might be
closed.
1.6 Types
A merger is a fusion of two companies. Mergers can be of following types:
1. Horizontal Merger
This involves merger of two companies operating and competing in the same industry. Thus, in
case of this merger, two companies which are producing essentially the same products or

providing the same services or which are in direct competition with each other join together. A
merger between Coca-Cola and the Pepsi beverage division, for example, would be horizontal in
nature. The goal of a horizontal merger is to create a new, larger organization with more market
share. Because the merging companies' business operations may be very similar, there may be
opportunities to join certain operations, such as manufacturing, and reduce costs.
2. Vertical Merger
These are mergers between firms in different stages of industrial production or provision of
services in which buyer and seller relationship exists. Thus, in case of this merger, two or more
companies in which are engaged in the production of same goods or provision of same services
but at different stages of production or services join together. Vertical merger is an integration
undertaken either forward to come close customers or backward to come close to raw materials
suppliers. For eg: a coal mining company and a railway company which carries coal to different
industrial units may merge together. Such a merger as vertical merger.
3. Conglomerate Merger
These are mergers between two or more companies having unrelated businesses. These
transactions are not aimed at explicitly sharing resources, technologies,Synergies or product.
They do not have an impact on the acquisition of monopoly power. For eg: a company engaged
in manufacturing activities may get itself merged with a company engaged in insurance business.
The two businesses are totally different and therefore, such merged is termed as conglomerate
merger.
4. Congeneric Merger
A Congeneric Merger is one of the important types of merger in the corporate world. Such a
merger involves the merger of two companies who operate in the same industry but offer
different products or different lines of products. Though these companies do not offer the same
products, they may have in common technology, production processes, and/or distribution
channels. We also call this merger Concentric Merger. The 2002 merger of Broadcom and
Mobilink Telecom is also a good example of this type of merger. The two firms were part of the
electronic industry but were offering different products.
5. Reverse Merger
In case of an ordinary merger, a profit making company takes over another company which may
not making a profit. The objective is to expand or diversify the business. However, in case of

reverse merger, a healthy company merges into a financially weak company and the healthy
company is dissolved. The basic reason for reverse merger is to take advantage of the provisions
of income tax which allows a company to carry forward its losses to set off against its future
profits.
Reverse mergers involve mergers of profit making companies with companies having
accumulated losses in order to:
(a) Claim tax savings on account of accumulated losses that increases profits
(b) Set up merged asset base to accelerate depreciation
1.7 Purpose of merger
The basic purpose of merging the company is to achieve faster growth in the corporate world.
The growth of the company may be shelf through product improvement and other purpose for
acquisition are given below: Procurement of Supplies the company by the way of merging and
acquisition can safeguard the sources of supplies of raw materials and to obtain economies of
purchase in the form of discount, saving cost of transportation costs, overhead costs in buying
department etc.. The companies get merged to achieve this purpose.
1. Revamping Production
●To achieve the economies of scale by amalgamating production facilities is more intensive
utilization of plant and resources.
●To obtain improved production technology and knowhow from the offered company.
2. Market Expansion and Strategy
●To eliminate competition and protect existing market.
●To reduce the cost of advertising and to improve the public image of the offered.
3. Financial Strength
●To improve the liquidity and have direct access to the cash resources.
●To utilize the tax benefits.
●To dispose of surplus and outdated assets for cash out of combined companies.
4. General Gain
The company is said to improve its own image and attract superior managerial talents to manage
its affairs by the way of merger and acquisition. The most general purpose of merging is to offer
better satisfaction of product to the consumers or uses of the product.
5. Strategic Purpose

The company makes an effort to achieve strategic objectives through different types of
combinations or mergers which may be horizontal, vertical, product expansions other specific
unrelated objectives depending upon the corporate strategies. Thus, these types of combination
distinct from each other in their nature and are adopted to pursue the objectives.
1.8 Forms of merger

The different forms of Mergers and Acquisitions are given below:
1. A+B = A: Here, two entities A and B merge such that one, say B loses entity, A becomes an
enlarged one. In this case, A is the acquiring company and B is the target or the acquired
company. This is generally called as Absorption (i.e. B is absorbed by A) or 100% or „complete
takeover‟ of one company by the other.
2. A+B =C Here combining two entities A and B, the new entity C is formed such that A and B
cease to exist. This is generally called as Amalgamation, i.e., the amalgam C is formed by A and
B.
3. (A-a) + (B-b) = A + B + C, where A > a, B > b & C = a + b: a in this form, a small business a
is divested from the entity A and similarly, a small business b is divested from the entity B. The
two divested businesses a and b are then combined to form a new entity C. This is generally
called spin-off.
4. A + B = A‟ +B: Here both the entities A and B combine in such a way that no one loses entity,
but one of them, say A control the affairs of B. A changes its status to A‟ and becomes the
holding company of B by purchasing the controlling shares of B. This partial takeover is termed
as Equity Alliance.
5. A + B = A + B: Here both the companies A and B combine to form some strategic alliance on
some strategic issues to form some cartel or pool. There is no balance sheet impact on the two
companies.
1.9 M & A: Strategic Alliances

1.9.1 Meaning
In recent times, there has been a rise in strategic alliances among companies across the globe.
These strategic alliances fall short of outright acquisitions and take a variety of forms, from
simple agreements between to buy or sell to the creation of separate and legally distinct entities.

Alliances are less formal and a new entity need be created. The alliance may involve multiple
partners, since the relationship is less legalistic, mutual trust is required. The speed of change in
relationship may be rapid. Firms may modify and move to other alliances as attractive
possibilities emerge. Some creative people do not wish to be in the environment of large firms.
But large firms may increase their access to creative people through alliances with small firms.
Some of the most successful global firms have used all the forms of acquisitions, joint ventures
and alliances to increase their growth opportunities.
1.9.2 Reason
1. A strategic alliance brings different competencies of partners together. This combination of
competencies is able to produce better results as compared to the sum total of the results of
individual organisation's competencies taken together.
2. In the competitive era, product development costs are quite. In order to reduce and bear such
costs, many organisations join together to share costs and have competitive products.
3. In the age of changing technology and market forces all organisations can not develop
matching competencies. Therefore, in order to match environmental requirements, they join
hands with others to complement their competencies.
4. Sometimes, global alliances are formed with organisations of another country to ease entry
barriers as local organisations may be well aware about the local business conditions.
5. Strategic alliances are formed to create opportunities to learn either the new way of doing a
thing or doing new thing.
1.9.3 Types of Strategic Alliances

The various types of strategic alliance are as follows:
(i) Supply or purchase agreements
(ii) Marketing, sales and service alliance
(iii) Agreement to develop technology
(iv) Licensing
(v) Franchising
(vi) Joint venture

A strategic alliance is basically a written mutual arrangement between two entities that
complement each other. Its incorporation is neither that of a partnership nor that of a company.
Instead it is the commitment by the two entities to provide capabilities of cross servicing in
certain identified areas. These arrangements differ in scope mainly by virtue of the following.
(a) Capital commitment
(b) Structure of the organisation
(c) Decision making
(d) Proportion between risks and reward.
(i) Supply or purchase arrangement
In this type of alliance, partners join hands together to keep their supply chain intact and help in
improving manufacturing efficiency.
(ii) Marketing, sales and service alliance
Such an alliance is established to make join efforts by all partners so as to create synergistic
effect for marketing product or services, thereby, enhancing sales revenues and reducing
marketing costs. Such alliances are quite common in india. The current phenomenon of strategic
alliances in the insurance sector, travel tourism industry, including partners from different
background and business is a testimony to the fact.
(iii) Technology development contracts
In this type of alliance, different partners join together to reduce costs and hedge the risks
associated with technology development. All the partners pool their R & D efforts together by
exchanging information and ideas among themselves through networking. There has been lot of
instances of this type in the Indian Pharmaceuticals industry.
(iv) Licensing
A company may allow another to sell its product or to relabel and sell as its own brand product
and service offering. Licensing is also common with technical inputs to products, such as
software code. For eg, it is a common practice to license software code and then use it in your
own firm's product. In a typical arrangement, the party giving the license will allow the other to
use a patent, a trademark or proprietary information in exchange for a fee which is based on
sales.
(v) Franchising

This alliance is very common in the retail and fastfood industries. Here, owner/operators use the
brand and central operations of a franchiser but a separately owned firm. This mechanism may
used when M&A will not work, because ownership restrictions exist in a certain jurisdiction and
when internal investment capital is insufficient to fund growth.
Franchisee agreements typically require payment of a fee up front and then a percentage of the
revenues. In return, the franchiser provides assistance and instances may require the purchase of
goods and supplies to ensure the same quality of goods and services worldwide.
(vi) Joint ventures
Under this arrangement, two or more firms contribute assets, cash and personnel into a new
jointly held entity. This entity is more like a partnership with the primary purpose of completing
business project. Joint ventures are limited in scope and operation.
There are several objectives that may be achieved by a joint venture. The participating firms
obtain an opportunity to share risks. Working with other firms reduces the investment costs of
entering potential risky new areas. Firms may share technology in the interest of helping the joint
venture. There is also a potential of sharing managerial skills in organisation, planning and
control. Joint ventures have proved to be particularly advantageous in the international setting. In
some part of the world, local government may not allow an acquisition. A joint venture presents
an opportunity to combine some assets without violating such regulation. International joint
ventures usually reduce risks of firms operating in foreign countries. Further, joint ventures have
been used as a means of circumventing certain international trade barriers.
Joint ventures could be a solution when high uncertainly is involved in the divestiture of a
segment acquired by another firm. A common pattern is for the acquirer to pay cash for 40 to 45
percent of the division being divested. A joint venture is used as a device for the selling firm to
convey knowledge of manufacturing or distribution. The motivations and the incentives are all in
the right directions. Consequently, after a year or two, the joint venture may be terminated by
completing the purchase. Typically, the prize received for the second segment is proportionally
higher than that for the first segment because the acquirer better understands the potentials of the
business. Value is created by minimising employee turnover and avoiding the impartment of
supplier and distribution networks.
1.9.4 Structure of Strategic Alliances

The structure of any strategic alliance may be based on contractual types, corporate entity and
hybrid types.
(i) Contractual approach
As the name suggests this involves cooperation based only on contractual relationships. It is very
commonly adopted everywhere for scripting a contact for sharing of resources, developing new
products, marketing or exploration of know-how. The advantages are as follows:
 It is quick to start with fewer formal requirements and avoids the permanence of a
corporate structure.
 May give quick results based on coordination and cooperation between the partners.
The disadvantages are given below.
 It is likely to become complex as the number of parties increases and the business areas
allocated to the alliance become more operational (for example, exploitation of any
jointly developed intellectual property).
 This type may less likely to encourage long term commitment to an alliance because it is
less formal and there is no corporate entity to exit or unwind.
 May not be sufficiently transparent for competition and regulatory purposes. Because the
arrangements are solely between the alliance member and not through a formal corporate
entity.
(ii) Corporate entity approach
This is being implemented through a special purpose vehicle (SPV) either an entity and
partnership together with any required commercial agreements. The advantages of this type are
given below.
 It may be easier to operate with larger number of participants, especially once the project
becomes operational.
 It is more likely to comply with requirements to operate smoothly. Because of the
existence of a separate entity which would be free from routine dependence and
interference.
 Management of jointly developed rights is likely to be easier through SPVs than joint
ownership.
 The SPV many have limited liability status and the ability to raise finance and will
therefore be independent of the parties to the alliance.

 It is easier to include new parties to the structure.
Disadvantages of the corporate entity approach are as follows.
 There are limits to what the parties will be prepared to hand over to the alliance, as the
parties will wish to retain certain aspects, such as customer ownership and network
operations.
 It may be difficult and time consuming to set things going.
(iii) Hybrid approach
This involves cooperation being established on a contractual basis which enables one or more
vehicles to be used as and when required for specific purposes, for example to exploit jointly
developed intellectual property rights to perform functions as the parties decide from time to
time. The main advantages of hybrid approach are stated below.
 Allows the parties the flexibility to develop new sources through existing contractual
arrangement, and to centralise management for appropriate operational functions as
necessary.
 It may allow parties to respond to legal and regulatory sensitivities in a flexible manner.
 May make it possible for the SPV to raise finance and engage alliance specific personnel.
Disadvantages of the hybrid approach are given below.
The commercial arrangements will need to be sufficiently flexible to allow change overtime if
activities moved into an SPV on the basis of the business model.
1.9.5 Problems in Indian Strategic Alliance/Joint Ventures

Strategic alliance/joint ventures with foreign partners having started showing problems because
of differing approaches of partners. The problems which have emerged at the individual levels
have created lot of tension. In case of LML, the rift between the two partner. Piaggio and
Singhania have gone to the court level both at the local as well as international level. There have
been reports of calling off of the JVs due to differences. The Tata-Unisys (between Tatas and
Unisys) has been called off and instead Unisys has set up its own wholly owned subsidiary.
Another typical problem that has emerged lately (in 1999) is the attempt of foreign partners to set
up their wholly owned subsidiaries in the same field in which they are partners in JVs. There are
around 800 MNCs operating in the indian market with different types of ownership patterns like,
(a) MNCs have set wholly-owned subsidiary at the initial stage like Coca-cola, Kellogs etc.

(b) MNCs have sold their technologies either on royalty basis or outright sale basis.
(c) MNCs have set their business either as branches and wholly-owned subsidiary and had to
dilute their equity because of legal requirement under FEMA, eg, Pfizer, Glaxo etc.
(d) MNCs are the partners almost at par with their Indian counterparts.
The problems have emerged because some of the MNCs falling in the last categories have opted
for setting their wholly-owned subsidiaries in the field in which they are operating with equity
participation.
The main concerns of the Indian partners are that.

(i) Wholly-owned subsidiaries will be paid more attention as compared to JVs.
(ii) Subsidiaries will ultimately compete with those of JVs in which subsidiaries would be
ultimate winner because of technology from their partner.
Mergers of banks began in India in the 1960s in order to bail out the weaker banks and protect
the customer interests. After that in post liberalization period the quest to create an Indian bank
that would be in the league of global giants had been continuing since 1990. Moving on the path
of creating one of the largest global banks, the government had approved the merger of five
associate banks with SBI in February 2017. Later in March, the Cabinet approved merger of
BMB also.
The Finance Minister of India has also announced Rs.55,000 Crore recapitalization plan for the
banks formed after merger. Besides, recapitalization will also be infused to the six other banks
which are not the part of this merger
Research Methodology
1.10 Need to study
Since the early 1990s, the structure of the banking sector has significantly changed due to the
deregulation and liberalization, accompanied by divestment of public sector banks, entry of
foreign banks and merger of many banks in India and in the world. In the post reform period
about 25 bank mergers took place in India. These mergers have important implication on the
performance and profitability in the banking system. Therefore from the point of view of both
managerial and policy interests, it is extremely important to know the impact of these merges on
the efficiency levels of banks and their temporal behaviour so as to understand how the banking

industry has been reacting to these emerging challenges and which banks are performing better
than others in this period of transition.
Mergers and Acquisitions existed in olden days too although the reasons for mergers differed
from time to time, and they may have differed from company to company. The work of merger
has become easier after the new economic policy (Liberalization policy in 1991).
The 1990s viewed substantial growth of mergers and acquisitions by the corporate sector in new
economic policy of 1990 ushered into an era of mergers and acquisitions of banks in India. This
trend was started in 1991, with the deletion of the relevant sections of MRTP (Monopolistic and
Restrictive Trade Practices Act) and FERA (Foreign Exchange Regulation Act), which required
banking companies to get prior permission from the government for mergers
1.11 Scope
It is apparent that the consolidation of banking in India will be playing a very vital role in the
economy of India. The present study aims at banking sector reform of the. So, development in
banking sector has been studied here for a period relating to after merger after reforms started.
Study covers various steps taken by government to liberalize the banking sector since 1991.
The most important among them are recommendations mainly include guidelines for asset
classification, provisioning requirement, capital adequacy, internal autonomy and operational
flexibility etc. The initiatives were discussed at length in this study. Time and sequence of
reforms form a very important part to make a reform process successful.
Mergers and Acquisitions have revolutionized the way a business is carried throughout the
world, and they have changed out to be the nucleus issue of various studies all the universal. The
purpose of this study is to help fill significant gaps about information about the performance
after mergers in India.
1.12 Reason
1. Financial synergy for lower cost of capital: Value from synergy is always created by the
joining or the merger of two companies. The synergy value can be seen either through the
Revenues (higher revenues), Expenses (lowering of expenses) or the cost of capital (lowering of
overall cost of capital).
2. Creating economies of scale: The increased fund flow provides increased opportunities for
further consolidation and expansion thus mitigating against any future fund flow constraints.

3. Creating a strategic realignment and technological change: The company merged with or
acquired would have technologies which add to the ease of doing business of the organization.
This is something that will be of great advantage to the acquiring or merged entity.
4. For Tax considerations: The ability to take advantage of the losses of the entity being acquired
or merged into could be tantalizing for any business as it would bring down the losses of that
entity.
5. Making pricing gains by purchasing an under-valued target: The acquiring or merging entity
could be great value because of the fact that it‟s coming cheap.
1.13 Procedure of merger
(i) The procedure for merger either voluntary or otherwise is printed within the several state
statutes/the banking rules act..
(ii) While choosing the merger, the approved officers of the exploit bank and therefore the
merging bank sit on and it discuss concerning the procedural modalities and financial terms.
Once the discussion was finished, à theme was ready to include all the small print of each the
banks and therefore the space terms and conditions. Once the theme was finalized, it's been
tabled among the meeting of board of administrators of banks. The board discusses concerning
the theme and accords its confirmation if the proposal was found to be financially viable and
useful in end of the day.
(iii) After the board approval of the merger proposal, an additional normal general meeting of the
shareholders of the several banks is converted to debate the proposal and look for their approval.
(iv) After the board approval of the merger proposal, a registered appraiser is appointed to
evaluate each the banks. The appraiser valuates the banks on the premise of its share capital,
market capital, assets and liabilities, its reach and anticipated growth and seeks their approval.
(v) Once the valuation is completed and accepted by the several banks, they send the proposal
with all the relevant documents like board approval, shareholders' approval, valuation report etc
to reserve Bank of India and alternative restrictive bodies such security and exchange board of
India for his or her approval.

(vi) At last when getting approvals from all the establishments, approved officers of each the
banks then they sit along to debate and settle share allocation proportion by the exploit bank to
the shareholders of the merging bank.
(vii) After finishing higher than procedures then it'll signed by the banks
In a first three-way amalgamation, Vijaya Bank and Dena Bank will merge with
Bank of Baroda
NSE 2.50 % (BoB) from April 1 to create the third-largest lender of the country.
"Customers including depositors of Vijaya Bank and Dena Bank will be treated as customers of
Bank of Baroda with effect from April 1, 2019," the Reserve Bank of India (RBI) had said in a
statement on Saturday.
To make merger a smooth affair, the government last week decided to infuse Rs 5,042 crore in
BoB to enhance its capital base to meet additional expense.
According to the Scheme of Amalgamation, shareholders of Vijaya Bank will get 402 equity
shares of BoB for every 1,000 shares held. In the case of Dena Bank, its shareholders will get
110 shares of BoB for every 1,000 shares.
The government in September last year announced the first-ever three-way consolidation of
banks in India, with a combined business of Rs 14.82 lakh crore, making it the third-largest bank
after State Bank of India (SBI) and ICICI Bank.
The announcement of the three-way merger was among several reforms initiatives undertaken by
Financial Services Secretary Rajiv Kumar to make public sector banks (PSBs) healthy, robust
and globally competitive.
As part of the reform process, the government had also announced transfer of majority 51 per
cent stake to Life Insurance Corporation (LIC) in IDBI Bank in August last year to transform the
Mumbai-based lender.
Besides, the Department of Financial Services made a record capital infusion of Rs 1.06 lakh
crore in the PSBs in the current fiscal. As a result five public sector banks including Bank of
India, Corporation Bank and Allahabad Bank were out of the prompt corrective action
framework of the RBI earlier this year. Non-performing assets (NPAs) have shown negative
trend in 2018-19 and have reduced by Rs 23,860 crore between April-September 2018.

Following the merger, the number of PSBs will come down to 18.
Announcing the merger, Finance Minister Arun Jaitley had said "the consolidation will help
create a strong globally competitive bank with economies of scale and enable realisation of wide-
ranging synergies".
The merged entity will have better financial strength; Financial Service Secretary Kumar had
said adding that its net NPA ratio will be at 5.71 per cent, significantly better than PSBs' average
of 12.13 per cent.
Besides, provision coverage ratio would be better at 67.5 per cent against an average of 63.7 per
cent and the cost-to-income ratio of the combined entity would come down to 48.94 per cent as
compared to average of 53.92 per cent, he had said last year
1.14 Data collection
Data can be classified as primary data or secondary data
Primary Data: It is first hand data which collected by the investigator for a specific purpose. It is
pure in sense. The investigator can directly supervises and the control data collection process
Secondary data: It is a second-hand data that is already collected and recorded by some
researchers for their purpose, and not for the current research problem.
Sources and Techniques of Data Collection
Secondary data is used to collect to information about merger taking place in various banks
Comparative study of pre and post-merger of banks, its financial inclusion and business
performance

Chapter 2: Review of Literature
Under this study various researchers reviewed research papers for the purpose of providing an
insight into the work related to Merger and Acquisitions (M&As). After going through the
available relevant literature on M&A‟s and it comes to know that most of the work done high
lightened the impact of M&A‟s on different aspects of the companies. A firm can achieve
growth both internally and externally. Internal growth may be achieved by expanding its
operation or by establishing new units, and external growth may be in the form of Merger and
Acquisitions (M&A‟s), Takeover, Joint venture, Amalgamation etc. Many studies have
investigated the various reasons for Merger and Acquisitions (M&A‟s) to take place, Just to look
the effects of Merger and Acquisitions on Indian financial services sector.
1. Sinha Pankaj & Gupta Sushant (2011) studied a pre and post analysis of firms and concluded
that it had positive effect as their profitability, in most of the cases deteriorated liquidity. After
the period of few years of Merger and Acquisitions (M&As) it came to the point that companies
may have been able to leverage the synergies arising out of the merger and Acquisition that have
not been able to manage their liquidity. Study showed the comparison of pre and post analysis of
the firms. It also indicated the positive effects on the basis of some financial parameter like
Earnings before Interest and Tax (EBIT), Return on share holder funds, Profit margin, Interest
Coverage, Current Ratio and Cost Efficiency etc.
2. Kuriakose Sony & Gireesh Kumar G. S (2010) in their paper, they assessed the strategic and
financial similarities of merged Banks, and relevant financial variables of respective Banks were
considered to assess their relatedness. The result of the study found that only private sector banks
are in favor of the voluntary merger wave in the Indian Banking Sector and public sector Bank
are reluctant toward their type of restructuring. Target Banks are more leverage (dissimilarity)
Electronic copy available at: https://ssrn.com/abstract=2178051 7 than bidder Banks, so the
merger lead to attain optimum capital Structure for the bidders and asset quality of target firms is
very poor.
3. P Akhil Bhan has made an attempt to study the insight into the motives and benefits of the
mergers in Indian banking sector .This is done by examining the eight merger deals of the banks
in India during the period of reforms from 1999 to 2006. Through the empirical methods by

applying t-test and EVA value calculations the potential of the mergers has been evaluate to
study the efficiencies or benefits achieved due to the merger .Through this paper and the sample
taken for analysis it has been concluded that the mergers in the banking sector in the post reform
period possessed considerable gains which was justified by the EVA of the banks in the post-
merger period.
4. Ms. Astha Dewan focused on the post-merger financial performance of the acquirer
companies in India and performance of firms going through mergers in Indian industry. The
merger cases for the year 2003 have been taken for the analysis. The financial data has been
collected for six years from 2000-06. Pre-merger and post-merger financial ratios have been
examined using paired sample test. The results of the analysis reveal that there is significant
difference between the financial performance of the companies before and after the merger.
Further, it has been found that the type of industry does seem to make a difference to the post-
merger operating performance of acquiring firms
5. Pramod Mantravadi & a Vidyadhar Reddy studied the impact of mergers on the operating
performance of acquiring corporates in different industries, by Examining some pre- merger and
post-merger financial ratios, with the sample of firms chosen as all mergers involving public
limited and traded companies in India between 1991 and 2003. The results from the analysis of
pre- and post- merger operating performance ratios for the acquiring firms in the sample showed
that there was a differential impact of mergers, for different industry sectors in India. Type of
industry does seem to make difference to the post-merger operating performance of acquiring
firms
6. Ravi Sanker and Rao K.V '' Takeovers as a strategy of turnaround'' They analysis the
implications of takeovers from the financial point of view with the help of certain parameters
like liquidity, leverage, profitability etc. They observed that a sick company is takeover by a
good management and makes serious attempts; it is possible to turnaround successfully.
7. Beena P.L, „An analysis of merger in the private corporate sector in India‟ she attempts to
analyze the significance of merger and their characteristics. The paper establishes that
acceleration of the merger movement in the early 1990s was accompanied by the dominance of
merger between firms belonging to the same business group of houses with similar product line

Chapter 3: Profile of company

3.1 History
3.1.1 Bank of Baroda
Bank of Baroda (BOB) is one the leading commercial bank solutions personal banking which
includes deposits bank in India. The gen-next services retail loans credit cards, debit cards
services and lockers; business banking which includes deposits loans and advances services and
locker; corporate banking which includes wholesale banking deposits loans and advances and
services and international business which includes Non-Resident Indians (NRI) services foreign
currency credits (FCC) of share banking export finance, import finance, correspondent banking
trade finance and international treasury. The bank offers services such as domestic operations
and forex operations. They also offer rural banking services which includes deposit priority
sector, advances remittance collection services pension and lockers. They also offer fee based
services such as cash management and remittance services. The bank is having their head office
located at Baroda and their corporate office is located in Mumbai. Bank of Baroda is one of the
India's largest banks with a strong domestic presence spanning 5458 branches and 10027 ATMs
and cash recyclers supported by self-service channels. The bank has a significant international
presence with a network of 105 branches, subsidiaries spanning 23 countries. The bank has
wholly owned subsidiaries including BOB financial solutions limited (erstwhile BOB cards ltd)
and BOB capital markets. Bank of Baroda also has a joint venture for life insurance business
with India first life insurance. The bank owns 98.57% in the National Bank. The bank also
sponsored three regional rural banks namely Baroda Uttar Pradesh Gramin Bank, Baroda
Rajasthan Gramin bank, and Baroda Gujarat Gramin Bank. Bank of Baroda was incorporated on
July 20 1908 as a private bank with the Bank of Baroda Ltd. The bank was established with a
paid up capital of Rs 1 million and the bank was founded by Maharaja Sayajirao of Baroda. In
the year 1910 bank opened their first branch in Mumbai City. In the year 1953 the bank opened
their first international branch at Mombasa Kenya. During the period 1953-1969 the bank opened
three branches in Fiji, five branches Kenya, three branches in Uganda and one each in London
and Guyana.
In 1961, BOB acquired New Citizen Bank of India. This merger helped it increase its branch
network in Maharashtra. BOB also opened a branch in Fiji. The next year it opened a branch in
Mauritius

In 1963, BOB acquired Surat Banking Corporation in Surat Gujarat. The next year BOB
acquired two banks: Umbergaon People's Bank in southern Gujarat and Tamil Nadu Central
Bank in Tamil Nadu state.
In 1965, BOB opened a branch in Guyana. That same year BOB lost its branch in Narayanganj
(East Pakistan) due to Indo-Pakistan War of 1965 It is unclear when BOB had opened the
branch. In 1967 it suffered a second loss of branches when the Tanzanian government
nationalised BOB's three branches there at (Dar es Salaam Mwanga, and Moshi), and transferred
their operations to the Tanzanian government-owned. National Banking Corporation.
In 1969, the Indian government nationalised 14 top banks including BOB. BOB incorporated its
operations in Uganda as a 51% subsidiary, with the government owning the rest.
In 1972, BOB acquired Bank India's operations in Uganda. Two years later, BOB opened a
branch each in Dubai and Abu Dhabi. Back in India, in 1975, BOB acquired the majority
shareholding and management control of Bareilly Corporation Bank (est. 1954) and Nainital
Bank ( est. in 1922), both in Uttar Pradesh and Uttarakhand respectively. Since then, Nainital
Bank has expanded to Uttarakhand, Uttar Pradesh, Haryana, Rajasthan and Delhi state. Right
now BOB have 99% shareholding in Nainital Bank.
International expansion continued in 1976 with the opening of a branch in Oman and another
in Brussels. The Brussels branch was aimed at Indian firms from Mumbai (Bombay) engaged in
diamond cutting and jewelry having business in Antwerp, a major center for diamond cutting.
Two years later, BOB opened a branch in New York and another in the Seychelles. Then in
1979, BOB opened a branch in Nassau, the Bahamas.
In 1980, BOB opened a branch in Bahrain and a representative office in Sydney, Australia. BOB
Union bank and Indian bank established IUB International Finance, a licensed deposit taker, in
Hong Kong. Each of the three banks took an equal share. Eventually (in 1999), BOB would buy
out its partners.
A second consortium or joint-venture bank followed in 1985. BOB (20%), Bank of India
(20%), Central Bank of India (20%) and ZIMCO (Zambian government; 40%) established Indo-
Zambia bank in Lusaka. That same year BOB also opened an Offshore Banking Unit (OBU) in
Bahrain (Gulf).

Back in India, in 1988, BOB acquired Traders Bank, which had a network of 34 branches in
Delhi.
In 1992, BOB opened an OBU in Mauritius, but closed its representative office in Sydney. The
next year BOB took over the London branches of Union Bank of India Punjab & Sind (P&S).
P&S's branch had been established before 1970 and Union Bank's after 1980. The Reserve of
India ordered the takeover of the two following the banks' involvement in the Sethia fraud in
1987 and subsequent losses.
Then in 1992 BOB incorporated its operations in Kenya into a local subsidiary. The next year,
BOB closed its OBU in Bahrain.
In 1996, BOB Bank entered the capital market in December with and initial public offering
(IPO). The government of India is still the largest shareholder, owning 66% of the bank's equity.
In 1997, BOB opened a branch in Durban. The next year BOB bought out its partners in IUB
International Finance in Hong Kong. Apparently this was a response to regulatory changes
following Hong Kong's reversion to the People's Republic of China. The now wholly owned
subsidiary became Bank of Baroda (Hong Kong), a restricted license bank. BOB also acquired
Punjab Cooperative Bank in a rescue. BOB incorporate a wholly–owned subsidiary, BOB capital
markets, for broking business.
In 1999, BOB merged in Bareilly Corporation Bank in another rescue. At the time, Bareilly had
64 branches, including four in Delhi. In Guyana, BOB incorporated its branch as a subsidiary,
Bank of Baroda Guyana. BOB added a branch in Mauritius and closed its Harrow Branch in
London.

3.1.2 Vijaya Bank
Vijaya Bank was established by a group of farmers led by A.B.Shetty on 23 October

1931 in Mangalore in Dakshina Kannada district of Princely State of Mysore (present-
day Karnataka). Since it was established on day of Vijayadashmi, it was named "Vijaya Bank".
During the economic chaos created out of the Great Depression of 1927–30, Shetty approached
leading Bunt personalities to start a bank with the objective of extending credit facilities at a
lower rate of interest to enable the farmers to cultivate their lands and prevent them from falling
into the clutches of money lenders. Accordingly, Shetty involved 14 Bunts and established
Vijaya Bank on 23 October 1931. In the beginning the bank had an authorised capital of 5 lakh
and an issued capital of 2 lakh. The paid up capital was 8,670.
The bank grew steadily since its inception. The bank became a scheduled bank in 1958. Under
the chairmanship of Shri.Mulki Sunder Ram Shetty Vijaya Bank steadily grew into a large All
India Bank with 9 smaller banks merging with it during 1963–1968. In 1965, the bank registered
its own logo. The bank's head office was shifted to Bangalore on 11 November 1969. The bank
was nationalised on 15 April 1980. At the time of nationalization, the bank had 571 branches,
with a total business of 605.95 crore and a staff strength of 9059.
The present head office building of the Bank at Mahatma Gandhi Road, Bangalore was
inaugurated on 26 October 1984.
The bank has introduced automatic renewal facility upto four times in respect of short term
deposits accepted for periods from forty six days to one year for the convenience of the
customers. - The novel scheme of `Vijaya Vichar Vihar' was introduced by the Bank in 1989 and
is now flourishing in 25 centers as on March. - In October, a new and unique scheme viz.,
'VIJAYASHREE UNITS DEPOSIT SCHEME' combining the features of term deposit and the
flexibility of savings bank deposit was launched.

3.1.3 Dena Bank

Dena Bank was founded on May 26, 1938 by the family of Devkaran Nanjee under the name
Devkaran Nanjee Banking Company.
It became a Public Limited Company in December 1939 and later the name was changed to Dena
Bank.
In July 1969 Dena Bank along with 13 other major banks was nationalized and is now a Public
Sector Bank constituted under the Banking Companies (Acquisition & Transfer of Undertakings)
Act, 1970. Under the provisions of the Banking Regulations Act 1949, in addition to the business
of banking, the Bank can undertake other business as specified in Section 6 of the Banking
Regulations Act, 1949.
Dena Bank has been the first Bank to introduce – Minor Savings Scheme, Credit card in rural
India known as 'DENA KRISHI SAKH PATRA' (DKSP), Drive–in ATM counter of Juhu,
Mumbai, Smart card at selected branches in Mumbai and Customer rating system for rating the
Bank Services.
Dena Bank one of the premier public sector banks, has introduced Dena Smart Card, to facilitate
anywhere banking. Dena Bank is the first bank to launch this unique customer friendly product.
It is for the first time in India that a Bank is using Smart Card for storing account details. The
new card will be known as Dena Credit Card against Can Card, presently offered by the bank.

3.2 Reason for merger of BOB, Vijaya bank & Dena bank
The Special Court for CBI Cases in Coimbatore on Wednesday convicted former branch
manager of a Vijaya bank in trippur district and three others in a 2007 bank fraud case which
caused the bank loss to the tune of 51 lakh. The main agenda for such a merger & acquisition
is consolidation of banks, to control the rise in bad loans or non-performing assets, to robust
financial health, upgradation of technology and ensure better scale efficiency. It also helps in
gaining a large number of new customers instantly. Main aim of merger and acquisition in the
banking sectors is to improve the economies of scale. A merger means combination of two
companies into one company. During the merging process one company survives and the other
company loses their corporate existence. On the other hand acquisition means takeover.
3.3 Importance
The merger of Vijaya Bank and Dena Bank into Bank of Baroda is proposed to be effective from
April 1, 2019. The amalgamation emphasizes on consolidating and integrating smaller banks
with bigger banks. The tripartite amalgamation reflects the government's focus towards
consolidation and strengthening of public-sector banking and also to deal with the raising
problematic issues like non-performing assets (NPAs) and default of loans.
The amalgamation will be made effective by way of share swapping pursuant to which Bank of
Baroda will issue shares to the existing shareholders of Vijaya Bank and Dena Bank. As per the
share exchange ratio approved in relation to the merger, the Bank of Baroda will issue 110 shares
of Rs 2 each for every 1000 shares of Dena Bank and 402 shares of Rs 2 each for every 1000
shares of Vijaya Bank.

The primary objective of this amalgamation is aimed at improving the customer base ,
consolidating the public sector banking and enabling the merged entity to compete at global
banking level.
Further, such massive consolidation is also expected to reduce the lending cost, the number of
NPAs and increase the merged bank's operational stability and profitability. The central
government had, previously in 2017 as well, merged six banks into State Bank of India, making
it the largest banking conglomerate.
Post-consolidation, Bank of Baroda will have business of around Rs 15.4 trillion and advances
and deposits market share of 6.9% and 7.4%, respectively. Further, considering the regional
widespread presence of Vijaya Banka and Dena Bank, the Bank of Baroda will have pan India
presence.
Amongst all the highlights, the deal is also likely to face certain hurdles in relation to its
implementation process, employee retention etc.
Continuity of employees has always been a crucial issue at the time of structuring as well as
implementation of a merger. In the present case, post-merger, Bank of Baroda shall become an
employer of over 90,000 employees working across 9,500 branches throughout the country.
Further, it will also have to integrate data of more than 100 million customers as well. With such
mammoth task at hand, the implementation phase of the merger may pose, for some, initial
teething issues for the merged bank and the government.
This amalgamation will present Bank of Baroda as the global conglomerate in the banking sector
aiming to achieve the higher working efficiency, financial stability and wider operationality.
Although there are reports of the share swap ratio being lower than the ratio which was earlier
anticipated by the shareholders of the merging banks, it appears that this move, in the long run,
will only strengthen the banking industry and will give the required boost to the public banking
sector.
It will not only facilitate national and global outreach but will also integrate public banking
sector in India. Having said that, realisation of such aim -- the success and the efficacy of the
consolidation will largely be contingent on the effective and smooth implementation of the
merger.

3.4 Why Do Bank Merge
The Indian Economic crisis in the year 1991 made the Government of India appoint several
committees to understand the evolving needs of the banking sector. Under the Chairmanship of
M. Narsimham, two expert committees were established.
The Narsimham Committee-II was the first committee to extensively discuss the scope of
mergers in India. The Narsimham Committee proposed for mergers between banks and also
between banks and NBFC‟s. The Committee proposed that mergers should be based on synergies
and also must certainly make commercial sense. Mergers between public sector banks can also
be beneficial if they lead to rationalization of the workforce and the branches of the institution.
The RBI has through a circular accepted the recommendations of the Committee and has allowed
for a merger between a NBFC and a bank.
The Committee very importantly identified the fact that the mergers should not be considered as
a means of “bailing out the weak banks”. It is clear to us that a number of mergers between SBI
and its associates have been done with the view to rescue the banks that were financially very
weak.
According to the Committee mergers should be between strong banks or between strong
financial institutions because then that would make much more commercial sense. It was
addressed by the Committee that merger could be a very viable solution to the problems of weak
banks but must only be done after clearing the balance sheet of the weak banks. If there were no
response to take over a weak bank then it would be appropriate to adopt for a Restructuring
Commission so as to safeguard the interests of the depositors and employees and also to deal
with the negative externalities. Now, it would be appropriate for us to understand the reasons that
motivate banks to merge.
Firstly, one of the primary reasons is the desire to enlarge and expand the capital assets of the
bank. A bank can lend only based upon the capital surplus that it possesses. Therefore, a merger
would certainly enlarge the capital stock of the bank and expand its width when it comes to
lending money.

Secondly, another reason for the banks to merge is to realize the economies of scale . Banks
generally do not have adequate managerial personnel who possess the requisite knowledge and
experience. Therefore, a merger would attract the best personnel to manage and utilize the larger
assets of the institution. In today‟s age size of a company has become a global glamor and
therefore, companies do not like considered as retirement farms.
Thirdly, a major reason for the banks to merge is to “diversify” their services . By merging a
bank can also increase their number of branches. Furthermore, if both the banks were engaged in
different activities then a merger would further enhance their scope of operation.
Fourthly, globalisation is also perhaps a major reason as to why bank mergers are being so
successful. The markets have now opened up and even foreign firms are entering the market. The
Government has allowed for the foreign firms to acquire the domestic firms. This has promoted
the scope of mergers and acquisitions in the banking industry.
3.5 Impact
A merger can have an adverse impact on the parties who are involved such as the employees,
shareholders, customers etc.
3.5.1 Impact on Employees
In case of mergers generally it is the employees are affected a lot. The employees have to go
through a lot of uneasiness and stress in case of a merger. No employee has any certainty about
his or her job. It is generally the case that when there are mergers there are layoffs too. The
employees who are laid off may be less valuable to the company and therefore, they may also not
be valuable to the potential employers. This could lead to severe unemployment because
although jobs may be available, it may not be available for the lesser skilled employees.
Discussing specifically of the banking sector, in case of compulsory amalgamations under S 45

of the Banking Regulation Act 1949, the scheme prepared by the Reserve Bank of India may
contain provisions that allow for the continuance of services of all the employees in the
transferee bank at the same remuneration and on the same terms and conditions of service. In
case of such a scheme, however, a three-year window must be given to the transferee bank to pay
or grant the same remuneration to the said employees. Nevertheless, despite this provision, as we

can observe that it is not compulsory for the Reserve Bank of India to provide for such
provisions in the scheme.
In case of mergers, it could also be the case that the transferee company is not financially well
off to employ the employees of the transferor company. However, despite this the law should
provide for some mechanism where the interests of the employees are safeguarded.
3.5.2 Impact on Shareholders
In case of a merger, shareholders of both the companies could be possibly affected. In the era
post nationalization, it can be argued that in a number of mergers between SBI and its associates,
shareholders were forced to sell their shares in the company at the specific price. In such a case,
the shareholders are greatly impacted by the proposed merger. However, under S44A of the
Banking Regulation Act 1949, any shareholder who is aggrieved by the scheme of amalgamation
can ask the Reserve Bank of India to determine the value of its share in the company. This
ensures that the procedure is more transparent in nature.
In case of an acquisition, the shareholders of the acquired firm greatly benefit from the
acquisition. This is because the acquiring firm aims to pay too much for the proposed
acquisition. Asymmetry of information could be a reason for the overpayment of price for the
shares. This affects the shareholders' value in the acquiring firm. This is because an acquisition
typically also includes the acquisition premium with the increased debt load and inefficiencies of
the shares.
3.5.3 Impact on Customers
In case of bank mergers, consolidation increases cost of services to the bank customers. Merger
generally enables the big banks to charge highly uncompetitive prices40 . This growth in prices
has also been witnessed in case of the 100 largest banks41. In 1994, the service fees for bank
deposits increased to $15.3 billion42. This is more than double of what was charged by the banks
in the year 1985. This makes it clear that big banks take advantages of mergers to charge highly
uncompetitive prices on deposits on deposit accounts. Large banks also have a tendency to not
serve customers with small balances in their accounts. It is not a surprise that customers with
small balance in their deposit accounts now tend to approach to smaller institutions.

Therefore, mergers can in general have adverse impact on customers. It is because of this reason,
in my opinion; the Competition Commission plays a very important role in ensuring that big
companies do not use this to their advantage and to the disadvantage of the public in general
3.6 Rules & Regulations:-
Section 230-240 of the act covers the provisions relating to M&A including arrangements that
cover companies, their members, and creditors. All sections except 234 became effective on 15th
December 2016 and S-234 was notified on 13th April 2017.
These sections are completely different from The Companies Act, 1956. Moreover, we had only
four sections relating to M&A i.e., 391-394.
Apart from these sections, we have Compromise, Arrangements and Amalgamation Rules, 2016
(„CAA RULES‟)
S-230 is R.W. S-232.Talks about corporate re-structuring through compromise and arrangement.
Under S-231 Power is with NCLT to enforce compromise and arrangement by
1. Accepting the proposal
2. Modifying the proposal and
3. Lastly by rejecting the proposal i.e., winding up of a company if they are unable to
pay a debt.
Section 232 talks about the procedure for the same. Moving ahead towards Section 233 is read
with Rule 25 of CAA. It talks about fast-track mergers. This section was inserted to prevent
companies from going through a lengthy procedure given under S-232. Provided they need to
have approval from shareholders, directors, creditors of the company. In short, each person is
directly related to a company.
Merger schemes can be vested between the following companies:

1. Holding Company and its wholly-owned subsidiary company;
2. The merger between two or more small companies;
3. Such Other class or classes of companies as may be prescribed.
Prominent features of this section are:
1. No mandatory approval of NCLT is required.
2. No need of issuing public advertisements.
3. Less administrative burden.
4. Economic in nature.
5. Series of hearing may be avoided.
Section 235 & 236 deal with the purchase of minority shareholding in a company. In the case
of Foss V Hardbottle [1], it was held by the court that the will of majority shareholders will
prevail and the court will not interfere in the internal management of the company. However,
minority shareholders can‟t be neglected or oppressed. But Court will ensure that majority
shareholders are exercising their powers within their limits.
The concept of squeezing out of minority was given legal recognition by the ministry of
corporate affairs under section 236 from 15th Dec 2016. In this minority shareholders leave the
company and sell their shares to majority shareholders.
Definition of minority shareholding has not been defined under the section it‟s just written their
shareholdings should not exceed more than 25%.
The procedure for the same has been mentioned in the section.

Section 237 says that the central government has the power for amalgamation in the public
interest and also lays down the procedure for the same. It is corresponding with Section 396 of
the Companies Act, 1956.
National Company Law Appellate Tribunal (NCLAT) deals with all grievances under company
law.
1. Competition Act, 2002
This act was replaced by MRTP Act 1969 to prohibit unfair trade practices, but it was not self-
sufficient and had lots of loopholes. To prevent monopolistic trade practices and win people‟s
trust competition act came into being. It dealt with all the challenges and holds a good command
over globalization. This will help in increasing the GDP in the economy. This will be achieved
when we will practice fair trade policies.
2. The Indian Income Tax Act, 1961
Meaning of term Amalgamation has been defined in this act under Section 2(1B),it means
merger of one or more companies into another company or two or more companies merged to
form a new company. The company which is merged is known as amalgamating company and
coin which that company is being merged or formation of the company is known as the
amalgamated company. Also, all the assets and liabilities of the amalgamating company become
the assets and liabilities of amalgamating company.
Act also has the concept of capital gain, which means gains or profits that one receives after the
sale of capital assets. Any gain from the sale of assets is our income and hence we need to pay
tax for that income in the year in which we have purchased it. It can be both short term and long
term.
3. The Indian Stamp Act, 1899

The act is in enforcing in the whole of India with respect to the rate of different instruments
which are commercial in nature. This is enacted by the central government, but it gives power to
the state government to either use the act as it is or can modify the same. Even they can enact a
different act for stamp duty for their state.
4. Foreign Exchange Management Act, 1999
The concept of Cross border mergers is dealt with by FEMA. It means any merger,
amalgamation, or arrangement between Indian and Foreign companies. FEMA regulations
provide that any transaction taken with respect to cross-border will take place through RBI, as
per the 25th rule of CAA Rules, 2016. Amendment of 2017 in companies act added Section 234
to the act which talks about cross border merger. In 2018 RBI notified in the official gazette
about inviting stakeholders for regulations. They will have a major role as they will keep an eye
on the market situation. Before 1999 we had FERA 1973 i.e., Foreign Exchange Regulating Act.
As the name suggests it was a regulatory body. They had no power of enforcing rules and make
changes in the act. It couldn‟t cope with the policy of LPG. There was an urgent need to repeal
the act and form such an act that actually has an impact on the economy and people start taking it
seriously.
5. The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
This regulation is important for the merger, acquisition, amalgamation, compromise,

arrangement for the listed companies. It prescribes that an acquirer acquiring substantial offers or
casting a ballot right i.e., 25% or more, should make an open proposal to every one of the public
shareholders of the objective organization. Independent of the offers or casting a ballot right
gained, the acquirer likewise should make an open proposal after obtaining control of the
objective organization. It, in this way, becomes vital to considerably comprehend the
significance of the word „control‟ and its suggestions. Be that as it may, because of the clashing
meanings of „control‟ by Indian enactment and courts just as the uncertain understandings of the
word, there is a shortfall of a thorough meaning of the word. Perceiving this vagueness and its
likely effect on financial backers in the public space in India, the Protections Trade Leading body

of India (Hereinafter “SEBI”) looked to characterize „control‟ and start a public discussion
process. This paper endeavours to clarify the idea of „control‟.
6. Insolvency and Bankruptcy Code, 2016
Before IBC we had Sick Industrial Companies Act, 1985 i.e., SICA legislation. This act was
enacted to detect the sick units and revive them through mergers and acquisitions, if possible, if
not then pass the order for winding up of sick companies. The main reason why this act came
into being was to release the investment which has been locked up so that resources can be used
in a different and efficient manner. Act also had two quasi-judicial bodies which have now been
repelled. After that in 2003 SICA legislation was repelled and newly amended legislation was
enacted. It had more stringent provisions and covered all loopholes which were there in the 1885
act. In 2016 SICA was fully repealed as it overlapped with provisions of the companies act. With
the enactment of IBC, companies act sections from 253-269 were omitted and now Section 255
and Schedule XI deals with it. It is administered by NCLT and helps in auctioning the assets
whose value has been depreciated. To start the process under the corporate insolvency resolution
process one need to file an application to NCLT. Many amendments have been made timely.
Recently in 2020 and 2021, it was made.
The Reserve Bank of India (RBI) has, by order dated November 18, 2019, imposed monetary
penalty on Bank of Baroda for non-compliance with directions issued by RBI on collection of
account payee cheques, reporting of frauds, opening of savings bank (SB) accounts, preservation
of records of identification of customers and Know Your Customer (KYC)/ Anti-Money
Laundering (AML) norms; and by order dated November 18, 2019, imposed monetary penalty
on Indian Bank for non-adherence of norms
The penalties have been imposed in exercise of powers vested in RBI under the provisions of
section 47 A (1) (c) read with section 46 (4) (i) and section 51 (1) of the Banking Regulation Act,
1949, taking into account the failure of the banks to adhere to the aforesaid directions issued by
RBI. This action is based on the deficiencies in regulatory compliance and is not intended to
pronounce upon the validity of any transaction or agreement entered into by the banks with their
customers.

7. Background
RBI, based on receipt of certain complaints about misappropriation and fraudulent withdrawal of
funds from the accounts of various government agencies/ departments through various accounts
of a co-operative society maintained with the banks, carried out a scrutiny, which revealed, inter
alia, non-compliance by the aforesaid banks with certain provisions of directions issued by RBI
on collection of account payee cheques, reporting of frauds, opening of SB accounts,
preservation of records of identification of customers, and KYC/ AML norms. Based on the
findings, Notices were issued to the banks advising them to show cause as to why penalty should
not be imposed for non-compliance with the above directions. After considering the replies
received from the banks, and submissions made during the personal hearings, RBI came to the
conclusion that the aforesaid charges of non-compliance with RBI directions, to the extent of
non-compliance in each bank, warranted imposition of monetary penalty.
8. Amendments to our Terms & Conditions
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the changed / amended Terms and Condition. Therefore, Please check this page periodically to
be aware of any changes.
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While Bank strives to provide the updated information on this Website, Bank makes no
warranties, either express or implied, about the accuracy, correctness, reliability etc. of such
information. We assume no liability or responsibility for any omissions or errors in the content of
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These terms shall be governed and construed in accordance with the laws of India. Bank of
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Chp 4: Data Analysis
Operating Profit for Dec‟19 increased to INR 4,958 crore registering Y-o-Y growth of 8.5%.
Non-interest income increased by 28.0%. Fee income up by 10%. Net Loss of Rs 1,407 crore due
to higher provisions.
Net Interest Margin (NIM) increased to 2.80% in Q3FY20 from 2.62% in Q3FY19 led by an
increase in domestic margins to 2.88% in Q3FY20 from 2.72% in Q3FY19. Domestic cost of
deposits in Dec‟19 lower by 16bps sequentially at 5.25%.
Global advances increased by 2.69% led by retail loans at 15.3%. Within retail loans, home and
auto loans grew by 10% and 43% respectively. Domestic CASA ratio at 38.8% compared with
37.9% in last quarter.
Gross NPA ratio at 10.43% as on December 31, 2019 against 10.25% in the last quarter. Net
NPA ratio at 4.05% as against 3.91% in the last quarter. Absolute amount of GNPA was INR
73,140 crore.
PCR continues to be high. PCR including TWO at 77.77% and PCR excluding TWO at 63.76%
as on December 30, 2019 compared with 77.88% and 64.42% respectively as on September 30,
2019.
Capital Adequacy Ratio of the Bank at 13.48% and CET-1 at 9.85% continues to be above
regulatory norms. Consolidated Capital Adequacy Ratio higher at 13.98%. Rs 3397 crore raised
through AT-1 Bonds in Q3FY20. Bank is adequately capitalized to grow.
Bank is working on realising revenue and cost synergies. Business strategy and processes of all
the three amalgamating banks aligned. IT integration is in progress with roadmap of system
integration in 2020.


Business Performance (1/2)
Business Performance (2/2)

Financial Inclusion (1/2)
Financial Inclusion (2/2)
In Q3FY20, the Bank’s 87 FLC centres across the country conducted 2856 meetings/camps
to educate 1,24,407 people. Further, Our 64 RSETIs have trained 13213 youth through 476
training programmes during the quarter.

Customer Revenues & Operating Performance
Interest Income & Expenses

Non-Interest Income
Operating Expenses

Profit Position
Movement in NPAs
Of the total fresh slippages of Rs 10,387 crore, Rs 4,509 crore is on account of RBI
divergence43

Provision Coverage Ratio
Balance Sheet – Consolidated

Capital Adequacy – Consolidated
Table no 1
Table 1 shows the comparative profitability situation of Bank of Baroda. The average earning
per share (EPS) before the merger had been Rs. 20.84 which increased to Rs. 34.90 after the
merger. The t-value (-3.72) and significance value (0.020) reveals that after the merger the EPS

enhanced significantly. The yield from advances decreased from 18.89 % to 11.79% after the
merger. Further, the t-value (12.92) and significance value (0.0002) divulge the significant
impact of merger on yield on advances. The yield on advances decreased due to underutilization
of advance in post-merger period. The yield on investment also decreases from 11.13% to
8.37%. The t-value (6.39) and significance value (0.003) shows the significant impact of merger
on yield on investment. The yield on investment decreases due to not utilizing the investments in
optimum level in the post-merger period. Return on assets does not change with respect to the
merger. The reason is proper utilization of assets in both pre- and post-merger period. Return on
equity witnessed minor change in post-merger period (14.10%) as compared to the pre-merger
period (15.81%). The t-value (1.15) and significance value (0.31) shows insignificant impact of
merger on return on equity. The net profit ratio decreased from 27.88% to 22.26% and the t-
value (0.21) and significance value (0.008) shows there is significant impact. Profit per employee
increases three times after the merger, and t-value (-3.65) as well as significance value (0.021)
show significant impact. The business per employee rose 2.81 times after the merger. The t-value
(-4.19) and significance value (0.013) reveal that the merger had significant impact on business
per employee. The increase in business per employee and profit per employee shows better
utilization of human resources. Overall, the merger has negative impact on Return on equity (%),
Net Profit Ratio, Yield on Advances (%) & Yield on Investments (%) and positive impact on
Return on assets, Earnings per Share, Profit per Employee and Business per Employee.
Table no 2

Table no 2 shows comparative study of BOB, Vijaya Bank and Dena Bank pre and post-merger.
Total business(in crore) 10,29,811 for Bank of Baroda, For Vijaya Bank Rs 2,79,674 and Rs
1,72,937 for Dena Bank. Gross advances paid 4,48,327 for BOB, 1,22,348 for Vijaya Bank and
69,917 for Dena Bank. Deposits (in crore) Rs 5,81,484 for BOB, for Vijaya Bank Rs 1,57,326
and Rs 1,03,020 for Dena Bank. CASA Ratio is 35.52% for BOB, 24.91%, for Vijaya Bank and
39.80% for Dena Bank. There are total 9,489 branches out of which 5,502 are BOB branches,
2,129 are Vijaya Bank branches and 1,858 are Dena Bank branches. Return on assets is 0.29%
for BOB, 0.32% for Vijaya Bank and -2.43% for Dena Bank. CET-I capital ratio is 9.27% for
BOB, 10.35% for Vijaya Bank and 8.15% for Dena Bank. CRAR capital ratio is 12.13% for
BOB, 13.91% for Vijaya Bank and 10.60% for Dena Bank. Net NPA ratio is 5.40% for BOB,
4.10% for Vijaya Bank and 11.04% for Dena Bank. Total numbers of employees are 85,675 out
of which 56,361 are of BOB, 15,874 of Vijaya Bank and 13,440 of Dena bank.
Study on the financial performance of BOB, Dena and Vijaya pre-merger and post-merger:
Operation Analysis of Merger
The operational performances of Bank of Baroda after the merger are analyzed as follow:
The standalone branches of Bank of Baroda were 5,553 before merger i.e. on 31st March 2019.
Vijaya Bank and Dena Bank had 2,119 branches and 1,775 branches respectively. Hence the
number of branches of Bank of Baroda is reached to 9,447 after merger on 1st April 2019. After
one year of Merger, the number of branches is increased to 9,482 at the end of 31st March 2020.
The standalone ATMs of Bank of Baroda were 9,572 before merger i.e. on 31st March 2019.
Vijaya Bank had 2,163 ATMs and Dena Bank had 1,513 ATMs. Hence the number of ATMs of

Bank of Baroda is reached to 13,248 after merger on 1st April 2019. At the end of first year of
Merger, ATMs are reached to 13,193. After the end of First year of Merger 3929 branches and
3621 ATMs of Bank of Baroda are increased i.e. 70.75% branches and 37.83 % ATMs
respectively.
The numbers of employees of Bank of Baroda, Vijaya Bank, and Dena Bank as on March 31,
2019 were 55,754, 15,882 and 13,334 respectively. As on March 31, 2019, the total number of
employees of all three banks was 84,970. But due to retirement and VRS scheme the total
numbers of employees on 31st March 2020 were 84,283 after merger. The total numbers of
employees are increased by 28,529 in number and 51.17% in percentage. Government officials
said that there is no retrenchment due to merger.

On March 31, 2019 the number of customers of Bank of Baroda, Vijaya Bank, Dena Bank as
were 8.61 crore, 2.50 crore and 1.72 crore respectively. As on March 31, 2019, the total numbers
of customers of all three banks were 12.83 crore. On 1st April 2019 after merger, the total
number of customers banks was 12.53 crore because nearly 30 lakh customers had account in
more than one bank. On 31st March 2020 the number of customers are increased to 13.10 crore.
The total numbers of customers are increased by 4.49 crore from 1st April to 31st March 2020
i.e. 52.15 % in percentage.
Financial Analysis of Merger
The pre-merger and post-merger financial performance and financial position of Bank of Baroda
is analysed as follow:
On March 31, 2019 the Deposits of Bank of Baroda were Rs. 6,38,689.7 Crore, Deposits of
Vijaya Bank were Rs. 1,75,817 crore and Deposits of Dena Bank were Rs. 100,652 Crore. In
which the Bank of Baroda's share was 69.79%. On 1st April 2019 after merger, the total
consolidated Deposits of Bank of Baroda was Rs.9,15,159 crore. But at the end of one year of
Merger, Deposits are increased to Rs. 945985.4 Crore. If pre-merger and post-merger Deposits
ate compared then it is found that Deposits are increased by Rs. 307295.7crore i.e. by 48.11%.
The Advances of Bank of Baroda were Rs. 4,68,818.7 Crore, Advances of Vijaya Bank were Rs.
1,30,606 Crore and Advances of Dena Bank were Rs. 51,959 Crore on March 31, 2019. In which
the Bank of Baroda's share was 71.97%. On 1st April 2019 after merger, the total consolidated
Advances of Bank of Baroda was Rs.6,90,121 Crore. On 31st March 2020, Advances are
increased to Rs.6,33,181 Crore. If Advances are compared pre-merger and post-merger then it is
found that Advances are increased by Rs. 2,21,302 Crore i.e. 47.20% only.

Chp 5: Conclusion
5.1 CONCLUSION
Merger and Amalgamation helps the banks and the economy to function more efficiently
because it helps in the increase of the resources and thus the profits. It is done to reduce the
competition and for survival in the market but it is good only when the economy does not gets
affected due to competition issues. They have their own benefits as well as disadvantages
accordingly. Merger and Amalgamation increases the efficiency of the banks but it leads to loss
of their own identities. It also helps in strengthening the base of the new unit and also helps in
saving of taxes. Domestic mergers are beneficial in case of competition in the market and Cross-
Border mergers are beneficial for increasing the revenue and profits and attracting the customers.
Thus pre-determined priorities need to be established to achieve the targets. Banks should merge
with their competitive banks only to maintain the same status and share the management. It also
helps in expanding of the reach and also geographical operation. But from the point of view of
the society, too many mergers should not be there because it reduces the options. CCI‟s
regulation of Merger and Amalgamation therefore intends to keep an eye on the banks that they
should not merge for the only motive of gaining profits at the cost of the customers through
illegal or unauthorized practices.
Consolidation of banks will consequently form a few strong banks to form a pillar of the
economy. With increasing stress in the banking sector from NPAs, small banks and NBFCs are
not in the potential to lend more loans. The merger will facilitate the government to pay closer
attention to the enlarged institution. It will protect the financial system and depositors' money
since the enlarged institution will be more profitable and better deal with any stressed loans. The
largest ever merger in the public sector banking space in India has taken place on Wednesday
April 1, 2020 when six Public Sector Banks were merged into four large banks in a bid to make
them globally competitive. Customers, including depositors of the merging banks, will now be
treated as customers of the banks in which they have merged. Following the consolidation, there
are now seven large public sector banks (PSBs), and five smaller ones. There were as many as 27
PSBs in 2017. The total numbers of public sector banks in the country have come down from 18
to 12 from April 1, 2020.
Merger and Acquisition of Banks in India and its effects has become a favourite topic of Group
Discussion in FMS Delhi, IIMs, MDI, and XLRI among others. Apart from other B-schools,
FMS Delhi also placed this topic in the final selection round in 2018. Below is shared the solved
write up on the topic. The Banks‟ merger dated April 1, 2020 has resulted in the creation of
seven large PSBs with scale and national reach, with each amalgamated entity having business of
over Rs 8 lakh crore and it has helped to create banks with scale comparable to global banks and
capable of competing effectively in India and globally. The exercise assumes significance as it
has taken place at a time when the entire country is under the grip of COVID-19 outbreak. It has
triggered 21-day lockdown to contain the spread of the deadly virus. Experts are of the opinion

that merger at this point of time may not be remain a very smooth and seamless transition.
However, heads of the anchor banks have exuded confidence and do not find any problem as the
process has gone as per the plan with certain modification in implementation. In addition,
consolidation would also provide impetus to merged entities by increasing their ability to support
larger ticket-size lending and have competitive operations by virtue of greater financial capacity.
Last year, Dena Bank and Vijaya Bank were merged with Bank of Baroda. Announcing the
mega plan of Banks‟ merger on Friday August 30, 2019 with an aim to have financially strong
Public sector banks in India, the Finance Minister of India Nirmala Sitharaman had outlined the
Government‟s plan to merge 10 public sector banks into four large banks. After the mergers,
there will be 12 public sector banks in India, including State Bank of India and Bank of Baroda.
The merger is expected to create fewer and stronger global-sized Banks to boost economic
growth. On March 4, 2020, the Finance Minister announced the final date of merger as April 1,
2020. According to her, the exercise of consolidation of 10 public sector banks (PSB) into four is
on course and the merger will come into effect from April 1, 2020.
The Union Cabinet has given a go-ahead for the merger It is but the desire for growth that acts as
the fuel not only for an entrepreneur but also for every professional or corporation. This deep
desire for growth in terms of customer base, balance sheet and profit has led the organizations
engaging in mergers and acquisitions to move ahead and onwards in synergy. The Indian Banks
too did not stay aloof from this wave of mergers and acquisitions (M&A). Initially banks were
merged to save nonperforming banks or non-efficient banks but as time evolved the system too
evolved. In the recent times mergers and acquisitions have also been made on grounds of
business growth, profitability and organizational restructure. The Finance Ministry opines that
the merger of these 10 public sector banks (PSBs) will help India make a USD 5 Trillion
Economy. The bank merger was done under the bank consolidation plan of the Union
Government. Have a look at the government‟s objective behind the merger of these banks:
- Enhanced capacity to increase credit
- Banks with a strong national presence and international reach
- Reduction in lending cost - Next Generation technology for the banking sector
- Improved ability to raise market resources
At first instance it may be said that merger has no effect on the firm but this may be partially true
because there might be chances that the companies may have performed well after merger or
acquisition but due to bad market conditions its performance may not have reflected in its
Market price as a result of which average return for the short term period would not have
changed On the other hand, the situation may be opposite as investor may consider merger good

for the company and increased its price by buying the stock excessively, even though impact of
merger on the company is bad but still it will get the chance to hide under the shade of increased
market return. In order to know whether average return for the firm increased, decreased or
remain constant for the firm we designed the model inspired by the “Fama's Three factor model”.
Using the above model we ran the regression on above mentioned stocks with CNX bank Nifty
and obtained output. Through this model we tried to explain the “effect of merger” by taking
account of all the factors which could have explained the variation in return and then predicted
the return for the second period and subtracted it from its actual return using t test.
According to the RBI, South Gujarat Local Area Bank had suffered net losses in consecutive
years and witnessed a significant decline in its capital and reserves. To tackle this, RBI first
passed a moratorium under Section 45 of the Banking Regulation Act 1949 and then, after
extending the moratorium for the maximum permissible limit of six months, decided that all
seven branches of SGLAB function as branches of Bank of Baroda. The final decision about the
merger was of the Government of India in consultation with the RBI dated 25th June 2004. Bank
of Baroda was against the merger, and protested against the forced deal.
When we regressed Bank Of Baroda with the Bank Nifty, PE ratio, MPS/EPS and Size, we
obtained the above mention results from which we can draw conclusion that as the merger came
into effect „Beta‟ coefficient of Constant reduced but the coefficients of all other variables i.e.
PE ratio, MPS/EPS, Size and Bank Nifty increased over the same period. Also looking at the
above table we can say that Constant, PE ratio, MPS/EPS and Size are insignificant but
Coefficient of Bank Nifty is significant. Even though some variables are insignificant but this
does not affect the viability of the model as overall model is significant.
In the emerging economies like India, the banking industry is one of the fastest rising industries.
In India, the post- liberalization period has seen rapid development, one of which is banking.
M&A in the banking sector has demonstrated that this is the useful tool of merging into a larger
Bank for the survival of weak banks. Our study shows that the effects of the global economy are
therefore difficult for small and local banks, and that they need support and this is one of the
reasons for their Merger. After this three-way Merger, Bank of Baroda is become third largest
bank to serving at every part of nation and strengthening the Indian Economy. Now it is
concluded on the basis of Annual Report whether merged entity is navigating towards predefined

goal. The following conclusions are formed up on the analysis of Annual Report of Bank of
Baroda for pre- merger and post-merger period.
At the end of first year of the post-merger period, the market size and customer base of the Bank
of Baroda are increased from 8.61 Crore to 13.10 Crore i.e. 52.15 %. The numbers of Branches,
regional and zonal offices, ATMs are increased. Bank of Baroda had either close or rationalise
branches to increase operational efficiency and reduce duplication due post-merger. Liabilities
and Assets are enhanced by 46.39% due to Merger. Deposits and Borrowings are increased by
46.22% and 39.04%. Investment and Loans & Advances are increased by 48.03% and 45.91%.
Operating Income is increased by 52.45% and Operating Expenses is increased by 60.15%. Then
Operating Profit is increased by 46% and Net Profit is increased by Rs. 112.70 crore i.e. 26%.
But The Gross NPA and Net NPA are also increased in Post-Merger period. This is a challenging
job for Bank of Baroda to reduce NPA.
The signs of Merger is expressing through Financial Analysis. Overall, the mergers would help
in better management of capital. Along with merger the focus should be on adequate reforms in
governance and management of these banks. Finally the area of service is more widened due to
merger. Bank of Baroda has experienced positive impact due to merger.
5.2 Suggestion
1. The bank should give prior information about the changes related to the account.
2. To make necessary improvements in the financial conditions of the bank.
3. To do proper strategic planning.
4. To give option to use debit cards in other bank ATM until the new bank card is issued.
5. If the branch are closed still can run an ATM services to avoid any inconvenience

6. Bibliography
https://www.researchgate.net
https://papers.ssrn.com
https://www.academia.edu
http://www.jetir.org
http://www.ijtrd.com
Referred to book of Merger, Acquistions and Corporate Restructuring by Rabi Narayan

kar and Minakshi

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A Study on Merger and Acquisition in the Indian Banking Sector

(Case Study on Bank of Baroda, Vijaya Bank and Dena Bank)

For partial completion of the degree of

Bachelor in commerce (Accounting and Finance)

Under the faculty of commerce

ALEENA EUGEBIO ANTAO

Under the guidance of

Prof. MACNOBLE M DRUZ

St GONSALO GARCIA COLLEGE OF ARTS & COMMERCE

VASAI (W), PALGHAR- 401201

ACADEMIC YEAR 2021-2022

ALEENA EUGEBIO ANTAO

Prof. MACNOBLE M DRUZ

This is to certify that MS. ALEENA EUGEBIO ANTAO student of B.com

(DR. SOMNATH VIBHUTE)

PROJECT GUIDE EXTERNAL EXAMINER

(PROF. MACNOBLE M.DRUZ)

I would like to thank my PRINCIPAL, DR. SOMNATH VIBHUTE for

I take this opportunity to thank our CO-ORDINATOR Prof. RUBINA

(b) By subscribing new shares being issued by the other company.

(c) By purchasing shares of the company at a stock exchange; and

TYBAF 1 St gonsalo Garcia college

Years Banks of India Merged

Journey From 1969 Nationalisation To 2019 Mergers

1. To study the impact of merger and acquisitions on the indian economy.

2. To understand the effects of merger pre and post pandemic.

4. To understand the purpose of merger and acquisitions

5. To know about the benefits of merger and acquisitions

6. To understand the banking awareness regarding mergers and acquisition.

TYBAF 2 St gonsalo Garcia college

1. It helps to reduce cost of operation.

2. It helps to improve the financial inclusion.

3. It increases the chance to entry in the global market.

4. It helps to manage the working capital of the bank in a better way.

1.5 Disadvantages of mergers and acquisitions

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1.8 Forms of merger

1.9 M & A: Strategic Alliances

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1.9.3 Types of Strategic Alliances

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1.9.5 Problems in Indian Strategic Alliance/Joint Ventures

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The main concerns of the Indian partners are that.

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1.13 Procedure of merger

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1.14 Data collection

Data can be classified as primary data or secondary data

Sources and Techniques of Data Collection

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