A Study Of The Impact Of Merger Of Public Sector Banks In India

Document Type : Primary Research paper


1 Assistant Professor, PG & Research Dept. of Commerce,The Quaide Milleth College for Men, Chennai

2 Research Scholar, University of Madras, Chennai

3 Assistant Professor, PG & Research Dept. of Commerce, The Quaide Milleth College for Men, Chennai


1950’s and 1960’s saw Indian Banking dominated by Private Sector Banks. This did not fulfill the requirements of the people of India in any big manner as credit facilities were denied to the needy sections of the population. The negative fallout of the Indian Banking sector, dominated by Private Banks was felt during this period. A solution came in the form of 20 banks nationalization in 1969 and 1980. Branches were opened across the country in deep areas to serve the banking requirements of the people. The purpose was well served by the 20 banks (subsequently reduced to 19) during the last four decades. But Public sector domination of banks also carried with them, their own limitations. The solution came in 1991 and afterwards, in the form of re-entry of Private Banks in the banking sector.
Domination of new generation Private Banks, varieties of products and services, making available Alternative Delivery Channels, concerted marketing in banks, extensive and indiscriminate use of sophisticated technology, etc., all were seen during 1990’s to 2020. Mounting NPA’s (Non-Performing Assets), frequent re-capitalization in Public Sector Banks, low profits, absence of competition in the global banking scenario, not-so-good customer service in Public banks all led to a serious thinking in the minds of the Central Government. The solution was merger of Public Sector Banks in the financial sector of the country reducing the total number of banks to the minimum.