Impact of Bank Mergers on Financial Performance, Asset Quality and Efficiency in India

Abstract

This study examines the impact of bank mergers on financial performance, asset quality and operational efficiency in India, with a focus on post-liberalization public sector consolidations. Using secondary data from annual reports, Reserve Bank of India publications and financial databases, the study uses a descriptive and analytical approach to look at pre- and post-merger tendencies of the top 10 banks. The findings demonstrate that mergers significantly increased asset bases, deposits, advances and capital adequacy, improving systemic resilience and market presence. Over the medium to long term, workforce optimization, economies of scale and technology integration improved operational efficiency while NPAs stabilized and profitability recovered. However, in the short term, inherited stressed assets and integration costs put pressure on profitability and asset quality. Unlike previous studies that focused on isolated indicators, this study uses an integrated framework that simultaneously evaluates asset quality, capital strength and operational efficiency to provide new empirical insights into policy-driven consolidations and highlight their role in improving long-term financial stability and competitiveness in India.