Impact of Merger and Acquisition on Indian Banking: An Empirical Analysis of Allahabad Bank Merger with Indian Bank

Abstract

Consolidation of public sector banks (PSBs) in India has been critical area on the financial ecosystem. This research focuses on the merger of Allahabad Bank with Indian Bank, analyzing empirical impact on Indian banking sector investigates the rationale behind such mergers, including objectives like strengthening balance sheets, improving operational efficiency, and addressing non-performing assets (NPAs). The study provides valuable insights for policymakers, financial analysts, and banking professionals, contributing to the discourse on the effectiveness of mergers as a strategic tool for the restructuring and revitalization of PSBs in India by employing Paired T-test as statistical tool covering four years before the merger (2017–2020) and four years post-merger (2021–2024) to evaluates pre merger and post merger performance. Key findings highlight that the merger has led to cost synergies, enhanced capital adequacy, and improved risk management frameworks. However, challenges such as cultural integration, technological synchronization, and customer service disruptions are also observed. The research underscores the broader implications of bank mergers on financial inclusion, credit growth, and the stability of the Indian banking sector. This paper aims to facilitate a deeper analysis of mergers and acquisitions landscape, offers recommendations for optimizing future consolidation strategies.