Assessing the Influence of Merger with Respect to Financial Performance of Indian Bank: A Camel Approach Analysis

Abstract

The merger of Allahabad Bank and Indian Bank, effective from April 1, 2020, is a significant event in India’s public sector banking consolidation. This study examines the merger's impact on Indian Bank’s financial performance using the CAMEL framework, which assesses Capital Adequacy, Asset Quality, Management Quality, Earnings, and Liquidity. A paired t-test was applied to analyse the bank's pre- and post-merger performance. The results show notable improvements in Asset Quality, Management Quality, and Earnings, indicating that the merger enhanced operational efficiency, profitability, and management practices. However, mixed results were observed in Asset Quality and Management Efficiency, suggesting ongoing challenges related to liquidity and financial stability. The study concludes that while the merger offers growth potential, its success depends on effective integration and continuous monitoring of key performance metrics. The CAMEL framework provides valuable insights into the impact of mergers in the Indian banking sector.