Chapter 1

Introduction
Our economy depends heavily on the banking industry, thus maintaining its strength and
health is crucial. Global merger and acquisition activity has increased due to this desire
for expansion, and Indian banks have not been immune to this trend. The main goal of
bank mergers was to save non-performing banks, but as time went on, the system also
advanced. Recent years have seen mergers and acquisitions for organizational structure,
business expansion, and profitability.

The Government of India (GoI) decided to merge ten public sector banks into four banks
in the most recent wave of these mergers. In 2019, Union Finance Minister Nirmala
Sitharaman declared the mega-merger. However, the RBI informed it in March via its
circular that banks would be merging in the upcoming fiscal year, which began on April
1, 2020. The merger will help with more effective capital management, according to the
finance minister. The PSBs were merged based on regional, concentration, and bad loan
criteria.

This amalgamation scheme comprises the merger of:

Allahabad Bank with Indian Bank

Syndicate Bank with Canara Bank

Oriental Bank of Commerce (OBC) and United Bank of India with Punjab National
Bank (PNB)

Corporation Bank and Andhra Bank with Union Bank of India

As a result of these mergers, India now has 12 large public sector banks, together with
State Bank of India (SBI) and Bank of Baroda (BOB) This implies that in 2017, as
compared to 27 PSBs there will be only five smaller public sector banks and seven larger
ones in addition, the government had pumped in about Rs 55,000 crores in public sector.

The decision made by the government to cut the number of public sector banks from the
current 21 to 12 was intended to create three to four institutions of a global scale.

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Banking System in India

Financial system is the backbone of growth and development of any economy by

mobilizing savings, allocating resources, providing access to finance and promoting
technological advancements. Banks are the most crucial unit of any financial system in
economy.

1.1 Definition of Banking System

The banking system in India is a network of financial institutions that provide financial
services to individuals, businesses, and governments. These institutions, such as banks
and credit unions, act as intermediaries between savers and borrowers. he banking
system in India provides a variety of services, including:

 Accepting deposits

 Lending money

 Facilitating trades

 Financial products like savings accounts, loans, and credit cards

 Safekeeping assets

 Internet services

 Foreign exchange dealings

 Underwriting of shares and debentures

The banking system in India is well established and has evolved over several decades
and is very crucial to the country's economic growth and development.

1.2 Definition of Bank

According to The Banking Companies (Regulation) Act of India,1949. Banking means

“The accepting, for the purpose of lending or investment, of deposits of money from the
public, repayable on demand or otherwise, and withdrawable by cheque, draft and
otherwise”.

1.3 Characteristics of commercial banks

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  Commercial Establishment

 Financial Intermediary

 Earning profits

 Accept Deposits

 Withdrawal by cheques, drafts

 Advancing Loans to public

 Repayment of Accepted Deposits

1.4 Classification of Banks

The Banking System in India is divided into following types, each serving specific roles
and purposes.

Table 1.1 Types of banks

Type of bank Sub division

Central Bank RBI

Payment Banks

Co-operative bank State Co-operative

Urban Co-operative

Commercial banks Private sector

Public sector
Foreign banks
Regional Rural banks(RRB)

Small Finance Banks -

Scheduled Banks -

Non-Scheduled Banks -

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Commercial banks are concerned services like giving loans, savings and current
accounts, and investments. Most common types of banks and include:

 Private Sector: They are privately owned and operated banks, such as HDFC
Bank, ICICI Bank.

 Public Sector banks are owned and managed by the government and include
State Bank of India (SBI), and Bank of Baroda (BOB) etc.

 Foreign Banks: banks that have branches in India and are headquartered in
some other foreign countries such as HSBC.

 Regional Rural Banks (RRBs): banks catering to rural or semi-urban areas and
are owned and managed by the central government, state governments and
commercial banks.

1.5 History of Banking in India

The banking sector underwent three phases of development:

I phase: 1770 to 1969 {Early Phase}

II phase:1969 to 1991(Nationalisation)

III phase: 1991 to till date (Liberalisation)

Pre Independence Period (1786-1947) “Bank of Hindustan” situated in Calcutta was

the the first bank established in year 1770 India. This bank failed and concluded
operations in 1832.In this Pre Independence period over 600 were registered in the
country, nonetheless only a few succeeded to survive such as:

 The General Bank of India

 Bank of Bengal

 Oudh Commercial Bank

 Bank of Bombay

 Bank of Madras

Three banks, namely the Presidential Banks, were founded by the East India
Company during British control in India: the Bank of Bengal, the Bank of Bombay,
and the Bank of Madras. Following their merger into a single bank in 1921, known as

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 the "Imperial Bank of India," all three banks were nationalized in 1955 and renamed
the State Bank of India.

. Other banks which were established during the Pre-Independence period:

Table 1.2 Banks established during 1786-1947

Bank Name Established in

Allahabad Bank 1865

Punjab National Bank 1894

Bank of India 1906

Central Bank of India 1911

Canara Bank 1906

Bank of Baroda 1908

Due to a lack of equipment and technology, human mistake and time consumption,
inadequate facilities, and inadequate managerial abilities, many large banks were unable
to thrive during the pre-independence era.

Post-Independence (1947-1991)

The Indian government's 1948 Industrial Policy Resolution called for a mixed economy
and took action to become more involved in the nation's economic affairs. As a result,
the state expanded its involvement in a number of economic domains, such as banking
and finance. Among the primary actions implemented to regulate banking were:

 Creation of RBI in April 1935 as the central banking authority, which was later
nationalized on 1, January, 1949

 The Banking Regulation Act of 1949 gave the authority to oversee, manage, and
examine Indian banks to RBI and to also provide the necessity to seek license for
opening a new bank or branch of an existing bank, and no two banks shall have
common directors.

After India got independence, majority of the banks were owned and managed privately.
This was major hindrance in path of growth and development of as rural population was
dependent on money lenders and basic banking facilities such as loans were far from

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their reach. Thus to overcome this problem, the Government decided to nationalise the
Banks under the Banking Regulation Act, 1949. The RBI was nationalised in 1949.

Later these 14 Banks nationalised in 1969:

1. Allahabad Bank

2. Bank of Baroda

3. Dena Bank

4. Syndicate Bank

5. Bank of India

6. Indian Bank

7. Union Bank of Indi

8. Bank of Maharashtra

9. Central Bank of India

10. Canara Bank

11. Indian Overseas Bank

12. Punjab National Bank

13. United Bank

14. UCO Bank

Later in year 1980, 6 were nationalized:

1. Andhra Bank

2. Oriental Bank of Comm

3. Corporation Bank

4. Vijaya Bank

5. New Bank of India

6. Punjab & Sind Bank

Seven subsidiaries of SBI which were nationalised in 1959:

1. SBP (State Bank of Patiala)

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 2. SBM (State Bank of Mysore)

3. SBH (State Bank of Hyderabad)

4. State Bank of Indore

5. SBT (State Bank of Travancore)

6. SBBJ (State Bank of Bikaner & Jaipur)

7. State Bank of Saurashtra

They later merged with the State Bank of India in 2017 (except for the State Bank of
Saurashtra that merged in 2008 followed by State Bank of Indore, in 2010).

Liberalisation (1991-till Date)

The government established a committee led by Shri. M. Narasimham to oversee the

numerous reforms in the Indian banking sector in order to give stability and profitability
to the Nationalized Public Sector Banks. Ten private sector banks were granted licenses
by the RBI to open in the nation.:

1. Global Trust Bank

2. HDFC Bank

3. Bank of Punjab

4. ICICI Bank

5. IDBI Bank

6. Axis Bank

7. DCB

8. IndusInd Bank

9. Times Bank

10. Centurion Bank

This committee also recommended a number of other reforms, including the

denationalization of banks, the establishment of branches for various foreign banks in
India, the RBI treating public and private sector banks equally, the opening of joint
ventures between foreign banks and Indian banks, the permission for small finance

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 banks to open branches throughout India, and the shift to internet banking and fund
transfer apps for the majority of Indian banking.

1.6 Growth Trends in Indian Banking Sector

The Indian banking market has recently seen the introduction of innovative banking
formats including payments and small financing banks. In recent years, India has focused
on growing its banking sector through a variety of programs, such as the Pradhan Mantri
Jan Dhan Yojana and Post Payment Banks. The country's credit cycle and financial
inclusion have been significantly enhanced by these programs, as well as significant
banking sector reforms like neo-banking, digital payments, the expansion of Indian
NBFCs, and fintech. In this industry, new banking models have emerged, including
payment banks and small finance banks. The recent initiatives taken by the RBI have
contributed to the growth of the domestic banking industry.

The introduction of technology like blockchain, UPI and payment gateways, mobile
banking apps, and artificial intelligence is causing a digital revolution in the banking
sector.

There are twelve small finance banks, forty-four foreign banks, twenty-one private sector
banks, and thirteen public sector banks in India. As of June 2024, there were 15,17,580
micro-ATMs in India overall. There are 1,26,772 ATMs and Cash Recycling Machines
(CRMs) on-site. During the first four months of FY23, banks installed 2,796 ATMs,
compared to 1,486 in FY22 and 2,815 in FY21.

The combined assets of public and private banks in 2024 were $186.72 billion and
$1264.28, respectively. 59.53% of all banking assets (including those of public, private,
and foreign banks) were held by public sector banks.The interest income of public banks
amounted to US$ 128.1 billion in 2024. In 2024, interest income in the private banking
sector reached US$ 95.7 billion.

The government, RBI, and all stakeholders worked together to grow digital payments by
a factor of ten in recent years. The Scheduled Banks' Statement from the RBI states that
as of July 12, 2024, the total deposits of all scheduled banks increased by an astounding
Rs. 2.11 lakh crore (US$ 2,544 billion).

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1 .7 Public Sector banks in India

Banks that have more than 50% of their equity held by the government are referred to be
public sector banks. In order to give depositors confidence that their money is secure, the
government creates all financial regulations and oversees their operations.

The development of public sector banks was hampered by political shifts in the early
21st century, and many banks recorded significant losses. These banks resumed their
growth trajectory and reported a ₹7780 crore profit in 2002–03. In order to restructure
and improve their operations, the Indian government combined ten public sector banks
into four, which resulted in a notable increase in profits. One of the largest banks both
domestically and internationally is the State Bank of India.

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1.8 Mergers & Acquisition: Meaning, Types, Need, Merits & Demerits

1.8.1. Definition of Merger& Acquisition

Mergers and acquisitions (M&A) are business transactions wherein the ownership of
companies or business organizations, or their operating units are transferred to or
consolidated with another company or business organization. Financial transactions
between two or more businesses can consolidate entire firms or their significant
commercial assets. Thus, the term "mergers and acquisitions" (M&A) describes the
consolidation or combination of businesses or their assets.

In an acquisition, one company purchases another company or a unit outright by taking

majority of stake in the company.

A merger refers to combination of two firms, that upon combining subsequently form a
new legal entity under one corporate name.

Source:wallsteertmojo.com

1.8. 2 Types of Mergers

 Horizontal merger: Two entities in the same industry and offering similar
products or services merge. This is one of the most common types of
mergers.

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  Vertical merger: A supplier buys a customer or vice versa. The companies
involved already buy and/or sell to each other.

 Conglomerate merger: Two companies in different industries join together or

one takes over the other. This can help reduce costs and risk.

 Market extension merger: Two companies from different global regions

operating in the same industry merge. This allows them to widen their reach and
access new markets and customers.

 Reverse merger A private company acquires or merges with a public company

to become public without an initial public offering (IPO).

 Product extension merger Two companies operate in a common market but

provide different line of products or services.

 Congeneric merger Also known as product-extension mergers, this type of

merger combines businesses in related industries selling different products.

 Reverse takeover A private company acquires a public firm to gain an upper

hand when going public

1.8.3 Types of Acquisitions

Asset purchase The company (acquiring) buys the assets of the target company. This
type of acquisition is common when the target company is facing bankruptcy.

Stock acquisition The acquiring company buys shares of the target company to gain
control of the target company.

Consolidation Two or more companies combine resources to form a new business

entity. Consolidation can improve a company's bottom line.

1.8.4 Special Considerations

Many factors affect mergers and acquisitions (M&A), including:

 Valuation: A poor valuation can make a merger or acquisition appear unsuccessful,

even if the integration is smooth.

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Due diligence: A thorough analysis of the target company's business practices, financial
results, legal status, and competitive positioning. This aids in locating possible
liabilities and hazards.

 Cultural integration: Post M&A how well the companies can adopt each other's
practices while maintaining their own.

 Integration issues: Major organizational changes can lead to operational and

cultural issues.

 Regulatory and legal considerations: The regulatory and legal framework of the
companies involved.

 Strategic fit: How well the companies fit together strategically and the potential for
synergies.

 Financial performance: The financial performance of the companies are crucial.

 Experience: The experience of the companies involved in previous mergers and

acquisitions.

 Trust: The level of trust between the parties involved.

 Communication: the degree of communication that existed prior to the merger or

acquisition between the parties.

 Plan quality: he quality of the purchase or merger proposal.

 Execution: How well the plan is executed.

 Integration speed: How quickly the companies are integrated.

1.8.5 Reasons for Mergers and Acquisitions

 Entering a Foreign Market

If a business wishes to expand its operations to a foreign market or a completely new

one, purchasing an existing business in that country may be the simplest way to get
into that market. Along with other intangible assets, the acquired company will
already have its own staff and brand. This can make it more likely that the acquiring
business will enter a new market with a strong foundation.

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  Growth

Perhaps a business ran out of resources or encountered logistical or physical

obstacles. When a business is burdened in this manner, it is frequently more prudent
to buy another company rather than grow its own. A business like this can search for
young, promising businesses to buy and add to its revenue stream as a novel means
of making money.

 Decreased Competition and Reduced Overcapacity

In times of surplus supply or rivalry, companies may begin to acquire in order to

eliminate the competitors, reduce excess capacity, and concentrate on the most
productive providers. Federal watchdogs frequently monitor transactions that could
have an impact on the market. Consumers may suffer from acquisitions involving
two comparable businesses, including increased costs and lower-quality products and
services.

 Gaining New Technological Edge

Sometimes it might be less expensive for a business to buy a company that has
successfully adopted a new technology than to invest the time and resources
necessary to create the new technology from scratch.

1.8.6 Benefits of Mergers and Acquisitions

Economies of scale

M&A aids businesses access more cash, boost production volume, reduce costs,
strengthen their negotiating position with distributors, and much more, all of which
contribute to economies of scale. A lot of businesses combine with other businesses that
manufacture comparable goods and services or operate in the same industry to obtain
economies of scale. In order to enhance production volume, decrease production costs,
and optimize profits, they combine locations, streamline and integrate support services,
and cut operational expenses.

Diversification

Through mergers, businesses can diversify their offerings of goods and services,
reducing the risk that comes with being dependent on particular markets. Businesses can

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expand their market reach and better adjust to shifting consumer tastes by introducing
new business segments.

Tax benefits

Mergers can be used to improve financial structures and obtain significant tax benefits,
as demonstrated by this tax planning strategy. Tax optimization, such as shifting the tax
rate by moving the company's headquarters, tax savings or tax loss carryforwards, better
access to capital, including better interest rates and access to other capital markets, better
working capital management, adjustments to the structure of capital, and more are
examples of the monetary advantages of a merger or acquisition. Because of the nature
of their operations, not all businesses are eligible for these advantage

Access to Talent

Merger offers the chance to streamline the organizational structure and choose
exceptional personnel from both businesses. It is not necessary for the merged business
to retain every employee from the acquiring and acquired businesses. Instead, they can
select the key workers from both to join the new company. The best employees may
depart first because they are unsure of their future in the integrated organization if hiring
decisions are not made quickly and fairly.

Knowledge and innovation accessibility

One of the biggest advantages of a merger or acquisition is access to expertise and

innovation, particularly in sectors like pharmaceuticals. It can take many different forms,
including knowledge about manufacturing, products, processes, and creative supply-
chain management. Although knowledge and invention can be difficult to quantify, they
frequently provide a competitive edge.

Integration of value chains

Certain value chain components are occasionally given precedence over revenue and
profit by businesses. An combined business may get further benefits by increasing its
footmark throughout the value chain by acquiring a business with complementary value
chain components. For instance, a cannabis business that specializes in product research,
cultivation, and processing may choose to purchase a company with robust distribution
skills in order to provide its product straight to consumers.

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Prospects for new goods or services

Through the combination of each company's goods or services, a merger or acquisition

may open the door to the possibility of launching a whole new product. Products or
services from technology-enabled industries are frequently able to be combined into one
by the acquired firm. The business may develop a platform solution, for instance, that
gives customers a single point of entry to all the services offered by both companies.

Decrease in competition

A business will have one fewer rival following the integration if it buys out a rival. If a
business buys out or merges with another business in a completely different industry, it
may encounter a new group of rivals.

Price Optimisation

A unique chance to look at product or service pricing from a different angle is presented
by a merger or acquisition. The combined business may take into account pricing
information from the acquired and acquiring businesses. If the company that was bought
was a rival, the combined business can raise its pricing. There may also be chances to
provide customers with better prices if the new, larger scale permits it. Consequently, the
combined business is able to increase its market share.

Improved Brand Perception

The purchasing company can gain a lot from a merger or acquisition of a business with a
strong overall brand. The purchasing company's brand can also help a less well-known
business.

Getting into new markets

Deals across borders provide businesses access to new markets. These markets may be
founded on regional or worldwide reach or on distinct clientele, as in the case of a
commercial insurance provider venturing into the small business insurance sector.
Gaining access to new markets will often boost revenue and sales.

Synergies

Since each company benefits from the other's strengths, combining corporate activities
tends to increase overall performance efficiency and lower overall expenses.

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1.8.7 Challenges in the Path of M&As

Mergers and acquisitions (M&A) can have many disadvantages, including:

 Cultural clashes

When companies with different cultures merge, it can be difficult to create a

unified culture. This can lead to employee resistance, decreased morale, and
high turnover.

 High costs

M&A can involve substantial financial costs, such as acquisition premiums,

legal fees, and integration expenses.

 Integration challenges

It can be difficult to integrate the operations of two companies with different

cultures. This can lead to conflict, confusion, and operational disruptions.

 Financial risks

Financial risks associated with M&A include overpaying for the target company,
taking on excessive debt, or running into undisclosed liabilities.

 Time-consuming

Due diligence checks can take a significant amount of time, especially if they
involve complex financial and legal checks.

 Diseconomies of scale

 Diseconomies of scale may arise if the new company's owner lacks the authority
needed to manage a larger business.

 Creates unemployment

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 An aggressive merger may result in employees losing their jobs. Bank employee
unions that are dissatisfied would lead to strikes and other issues.

Raises prices

A merger can result in reduced competition and a greater market share, that can
lead to a monopoly and increased prices.

 Governance issues

Taking weaker banks under its umbrella would expose the anchor bank to
governance-related issues.

 Customer dissatisfaction

Customers are affected emotionally by bank mergers. Customers may leave if

they are not informed about the merger and its goals in a timely and efficient
manner, which would result in a loss of business.

 Recapitalising Large banks

Compared to larger banks, the government may not face as much financial difficulty in
recapitalizing smaller banks. If the challenges encountered by smaller banks worsen and
become a bigger issue for the larger bank, consequences will be felt by the entire
economy, not just the banking industry.

1.8.8 Merger v/s Acquisition

Table 1.3 Comparison of merger and acquisition

Mergers Acquisitions

Occurrence A new joint company is created One business acquires another

by combining two independent business and takes over its
businesses. activities.

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 Shareholder’s Both businesses unite to create One business will buy another
Control a new business. Each company's and take over entirely.
shareholders will possess an
equal amount of stock in the
new business.

Size of Company Two businesses of around equal The two businesses can be of
size typically merge. any size difference in an
acquisition, with the larger
business purchasing the smaller
one.

Structure A merger is usually set up as a It is typically set up as a

stock exchange, in which the purchase of equity or assets, in
shareholders of each company which the acquiring business
get new stock in the merged gives the target company's
business shareholders cash or stock.

Negotiation A merger is usually arranged A typical acquisition is

between each company's board negotiated by each company's
of directors. senior management.

Approval Of Regulatory approval from Regulatory permission is not

Authorities antitrust authorities is typically needed until the acquired
required. company accounts for a sizable
portion of the industry's overall
assets or revenues.

Purpose The merger aims to combine Gaining market share or access

two businesses in order to to new items or technology is
generate economies of scale and the aim of the purchase.
synergies.

1.9 Bank Mergers at Global Glance

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As the regulatory environment shifted to allow for greater financial sector
consolidation, bank merger activity increased. Some of the biggest banks in America,
including Bank of America and J.P. Morgan Chase, were formed as a result of the 1999
repeal of the Glass-Steagall Act, which sparked a wave of acquisitions. Smaller
regional mergers, such as those between First National Bank and South Carolina
National Bank, also demonstrated how the banking industry was changing at this
time.Since then, some of the biggest and most significant M&A transactions in history
have taken place in the banking industry.

Bank of America and NationsBank (1998) The 1998 combination of NationsBank and
Bank of America It was worth $62 billion and established the nation's first coast-to-coast
bank, making it far more accessible to consumers nationwide. The concentration of the
sector saw a dramatic change when Bank of America grew to become one of the biggest
banks.

J.P. Morgan Chase and Bank One Corporation (2004) In 2004, J.P. Morgan Chase
strengthened its retail banking and credit card services by merging with Bank One
Corporation in a $58 billion deal. Through this transaction, the business became a
leader in financial services and broadened its regional reach. The combination
increased its product options and produced efficiencies.

Bank of America and FleetBoston Financial (2003) In 2003, Bank of America

increased its presence in the Northeast, including Boston, when it paid over $47 billion
to acquire FleetBoston Financial. The agreement increased operating scale while
granting access to a new clientele. Merrill Lynch and Bank of America (2009) Merrill
Lynch became a global leader in investment banking and wealth management when
Bank of America paid $50 billion to purchase it in 2009. This transaction expanded
Bank of America's service offerings while saving Merrill Lynch amid the financial
crisis. Despite operational integration issues, the deal strengthened Bank of America's
position in the market. It continues to rank among the most prominent mergers in
banking

First Citizens and CIT Bank (2022) In 2022, First Citizens paid $2.2 billion to buy
CIT Bank, expanding its middle-market and small business banking operations. The
merger increased First Citizens' geographic reach and diversified its product offerings.

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1.10Banking recent trends in India

1.10.1Liberalisation of the 1990s

A few private banks dubbed as "New Generation tech-savvy banks" were granted
licenses by the government in the early 1990s. One of these, Global Trust Bank,
subsequently merged with Oriental Bank of Commerce, IndusInd Bank, UTI Bank (now
known as Axis Bank), ICICI Bank, and HDFC Bank.

The anticipated relaxation of laws pertaining to foreign direct investment has marked the
establishment of the next stage of Indian banking. Beyond the existing 10% cap, voting
rights were extended to all foreign bank investors. The foreign investment quota was
raised by Bandhan Bank to 49% in 2019 and then, with some restrictions, to 74%.

1.10.2 Public Sector Banks (PSB s) Mergers from 2000 to 2010

SBI and its associate banks

SBI merged with its associate bank State Bank of Saurashtra in 2008 and State Bank of
Indore in 2010. n 2016, the Union Cabinet approved the merger of the five remaining
affiliate banks with SBI: State Bank of Bikaner and Jaipur, State Bank of Hyderabad,
State Bank of Mysore, State Bank of Patiala, State Bank of Travancore, and Bharatiya
Mahila Bank.

Bank of Baroda with Dena bank and Vijaya Bank

In January , 2019, the Union Cabinet and the bank board’s gave their approval to the
merger. Owners of Dena Bank and Vijaya Bank received 110 and 402 equity shares of
the Bank of Baroda, respectively, with face values of ₹2 for every 1,000 shares owned
under the terms of the agreements.

1.10.3 Capital restructuring of non PSU banks (2020s)

YES bank

In order to save Yes Bank, the RBI recruited SBI in April 2020 to invest alongside other
lenders like ICICI Bank, HDFC Bank, and Kotak Mahindra Bank.

Lakshmi Vilas Bank

In November 2020, the RBI instructed DBS Bank India Limited (DBIL) to assume the
operations of Lakshmi Vilas Bank following a decrease in the bank's net worth brought

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on by subpar management and two failed attempts to combine with NBFCs. DBS India,
which had just 12 branches at the time, benefited from LVB's intricate network of 559
branches.

Punjab and Maharashtra Co-operative Bank

The RBI instructed Unity Small Finance Bank Limited (Unity SFB) to take over the
management of Punjab and Maharashtra Co-operative Bank (PMC), a private sector
bank, in January 2022 due to the bank's subpar management and one failed effort to
merge with NBFC/SFBs. To pay for the bank's liabilities, Centrum Finance and payment
processor BharatPe were creating Unity SFB at the time.

HDFC Bank

HDFC Bank requested authorization to merge with its parent company, HDFC, resulting
in numerous likely capital holding violations. The combined company was given a year
to bring its capital holdings into the regulations. HDFC gave Bandhan Bank a 15% share
in its combined capital in exchange for its group company Gruh Finance before to the
merger.

1.11 Public Sector Bank Mergers in 2020

In August 2019, Finance Minister Nirmala Sitharaman declared the biggest consolidation
scheme in banking industry by merging 10 banks to form 4 large banks with aim to form
state owned global sized banks. This reduced the number of PSBs from 27 as in year
2017 to 12.

1.11.1 Merging Banks

Table 1.4 List of Merging Banks

Anchor Bank Amalgamating Business Size (rs. PSB Bank by size

Banks Lakh crore)

Punjab National United Bank of 17.94 2nd largest

Bank India & Oriental
Bank of
Commerce

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Canara Bank Syndicate Bank 15.20 4th largest

Union bank of Corporation Bank& 14.59 5th largest

India Andhra Bank

Indian Bank Allahabad Bank 8.08 7th largest b

1.11.2 Key Features of mega M&A 2020

 Punjab National Bank (PNB) will acquire the Oriental Bank of Commerce and
the United Bank of India. After the merger together these three will form the
second-largest public sector bank in the country. The State Bank of India (SBI) is
the country's largest state-run lender. PNB has also unveiled its new logo which
will bear distinct signage’s of all three lenders. The United Bank of India and
Oriental Bank of Commerce branches will function as PNB branches.

 Canara Bank and Syndicate Bank will combine to become the fourth-largest PSB,
with a combined revenue of Rs 15.20 lakh crore. The bank will employ 91,685
people overall and have 10,391 branches and 12,829 ATMs.

 After merging with Allahabad Bank, Indian Bank will become the seventh-largest
PBS, with a combined revenue of Rs 8.08 lakh crore. The combined company
would have 2,870 ATMs, 6,060 branches, and 9,000 banking correspondents.

 Union Bank of India will become the fifth-largest public sector bank in the nation
through a merger with Andhra Bank and Corporation Bank. After the merger,
Union Bank will become the combined company that owns all of Andhra Bank's
and Corporation Bank's investments.

 Twelve PSUs will exist following the merger, comprising six combined banks
and six separate public sector banks.

 SBI, Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank of India,
and Indian Bank are the six combined banks.

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 Indian Overseas Bank, Uco Bank, Bank of Maharashtra, Punjab and Sind Bank,
Bank of India, and Central Bank of India are the six separate banks.

 With effect from April 1, 2020, all customers, including depositors of merging
banks, will be regarded as customers of the banks in which these banks have
merged

 The government claims that seven sizable public sector organizations with a
nationwide presence will be formed by the merger of PSUs, each of which will
have operations worth more than Rs 8 lakh crore.

1.11.3 Need for Merger and Acquisition in 2020

 In 2019, India's finance minister announced that four larger central banks would
merge with ten state-owned banks. As a measure to mitigate the impact of bad
loans on the banking industry, the 10 banks were proposed to consolidate.
International lenders benefited greatly from the consolidation, which also helped
the banks' balance sheets. By 2024, India's economy was expected to grow to $5
trillion. The finance minister claims that the bank merger will enhance the banks'
technology, client base, competitiveness, and services.

 A bank's negative loan history is one of the main causes of bank mergers. A bank
is more likely to be merged with a large central bank if it has a number of
defaulters. As a result, tiny banks like the Syndicate Bank must only offer loans
following a thorough background check.

 The majority of India's smaller, state-owned banks, including Andhra Bank,

retain their data using outdated methods. Therefore, a merger is an ideal strategy
for these institutions to improve their accountability, supervision, and operational
efficiency.

 When a merger occurs, redundant operational overlaps are eliminated, which

promotes the expansion of the national economy. Furthermore, as the number of
banking operator’s declines, the banking industry will also experience a decrease
in costs.

23
  Due to the increased funds available for infrastructure development, bank
mergers leads to the creation of futuristic banks. Additionally, contemporary
banks broaden their global reach. Consequently, their client base expands.

 The mergers helped the government meet the capital requirements set out by the
BASEL III norms.

 Banks' balance sheets are strengthened when their assets and liabilities are
combined. In the end, it would assist in nullifying the smaller PSU banks' non-
performing assets (NPA) in India.

1.12 CAMELS MODEL

 Capital adequacy, asset quality, management, earnings, liquidity, and sensitivity

are the six variables that make up the well-recognized worldwide rating system
known as CAMELS, which is used by bank supervisory agencies to provide
ratings to financial institutions.

For every factor, supervisory agencies give each bank a score on a scale. The greatest
rating is denoted with a score of 1, and the lowest by a score of 5

 1.12.1 Components of CAMELS Rating System

 Capital Adequacy Examiners assess an institution's capital sufficiency using

capital trend analysis. Examiners also confirm that institutions are following the
guidelines for risk-based net worth norms. To obtain a high capital adequacy
rating, institutions must also follow interest and dividend policies and processes.
Other factors that are taken into consideration when grading and assessing an
institution's capital sufficiency include the state of the economy, growth
strategies, risk management skills, and loan and investment concentrations.

 Asset Quality discusses an institutional loan's quality, which is a measure of the

institution's earnings. Two steps in assessing asset quality are rating possible
investment risk variables and comparing them to the bank's capital earning.
Examiners also consider how the discrepancy between the book value and fair
market value of investments affects businesses. Lastly, the quality of an

24
 organization's assets is reflected in the efficacy of its investment strategies and
procedures.

 . Management relates to how management evaluation determines an

organization's capacity to react suitably to financial hardship. This component
grade reflects the management's capacity to recognize, measure, track, and
manage risks in the institution's daily operations. It addresses management's
capacity to guarantee the institution's safe operation while adhering to relevant
internal and external regulations.

 Earnings one of the most important aspects in evaluating a bank's long-term

survival is its ability to generate enough revenue to sustenance its operations,
grow, and compete. Assessing the bank's earnings, growth, stability, valuation
allowances, net margins, net worth level, and the caliber of its current assets is
how examiners arrive at this conclusion. A bank makes money from non-interest
sources like fees as well as interest-earning assets like loans.

 Liquidity means the accessibility of easily convertible assets, dependence on

short-term fluctuating financial assets, interest rate risk sensitivity, and technical
proficiency in asset and debt management are all factors that examiners consider
when evaluating a bank's liquidity.

 Sensitivity covers the potential effects that certain risk exposures may have on
institutions. Examiners can assess an institution's sensitivity to market risk by
monitoring the management of credit concentrations. In this method, examiners
may see how lending to specific industries affects an institution.

1.12.2 CAMELS calculation through ratios

Table 1.5 CAMELS Ratios

C Capital Adequacy 1. Debt Equity Ratio

2. Coverage Ratio
3. Advances to Asset

A Asset Quality 1. Net NPA to Net Advances

2. Total Investment to Total Assets

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 3. Net NPA to Total Assets

M Management Quality 1. Interest Income per employee

2. Net Profit per employee
3. Net profit per branch
4. Business per Employee

E Earnings 1. (ROA)
2. Net Interest margin
3. (ROCE)
4. Current Account Saving
Account(CASA)

L Liquidity 1. Liquid assets to Total assets

2. Quick ratio
3. Liquid assets to Total deposits
4. Current ratio

S Sensitivity 1. Price Earnings ratio

2. Price to sales

1.13 Rationale of Study

Due to deregulation and liberalization, as well as the divestiture of public sector banks,
the entry of foreign banks, and bank mergers in India and around the world, the banking
industry's structure has undergone significant change since the early 1990s. In India,
about 25 banks merged during the post-reform era. The banking system's performance
and profitability are significantly impacted by these mergers. Therefore, taking into
account of managerial and policy interests, it is essential to understand how these
mergers have affected banks' efficacy levels and time-based behavior in order to
comprehend how the banking industry has been responding to new challenges and which
banks are outperforming others during this time.

Several private & public sector banks in the past has joined resources to become one
strong group. The fact that banks are the foundation of any financial sector and play a

26
critical role in both fiscal stability and the growth of an economy makes this topic
imperative for debate for yet another reason.

The health of the banking system replicates the health of the economy.

With 27 PSUs, including the second-largest PNB, being merged and reduced to 12,
nearly every other individual who has a savings account or FD with a public sector bank
is expected to be impacted. So it is of extreme significance to study that post mergers
the performance of the banks has upgraded as proposed and they are benefiting from the
advantages of reduced competition, increased capital inflow, a large customer base,
improved business portfolio, asset quality, better market capitalization, increased risk
appetite, and risk management strategies.

Furthermore, employees are thought to be an organization's most valuable resource, thus

their opinion of any organizational activities is very important. This is owing to the fact
that when workers believe that changes brought about by M&A activity may violate their
psychological outlook, it could negatively impact the company's reputation among its
staff, which would lead to decreased performance.

Lastly customer’s perception is the key to the success and inevitable to measure the
performance barometer of any business strategy. Thus mergers as a strategy to enhance
efficiency of banks also need to factorise the customer perception regarding the quality
of services received from banks post M&A.

1.14 Scope of Study

This study aims to include the most recent merger of PSU Banks which came in to effect
on 1st April 2020 (announced by government of India in 2019). Within the corpus of this
study history of mergers and acquisition of banks, the reason /rationale of M&A, the
conditions leading to the adoption of strategy, process of M&A, merits and demerits,
financial impact on the profitability of banks, employee and customer perception are
included.

The study encompasses the employee’s perception towards merger process with key
reference to addressing cultural reorganization, excitement about new role job,
perception about new leadership and management and sense of job security in the new
entity thus formed.

27
Additionally, the study endeavors to provide a deeper understanding of customer’s
reaction to the merger process. Whether they are well informed about the decision, have
an understanding of merger mechanics, concerned about security of deposits,
continuance of banking services without hindrance and confidence in new brand thus
emerged as a result of such reorganization.

Lastly the study diversifies to check financial health of merging entities and effect of the
merger on their financial standing pre and post M&A.

1.15 Objectives of the Study

The aim of the proposed study is to evaluate the effects of merger and acquisitions on the
perception about dynamics of merger on the parties that are imperative to the process of
merger namely employees and customers and influence on financial standing of the PSU
banks in India after M&A. This approach compares the acquiring company's financial
performance after the merger by analyzing financial statements and ratios.

a) Additionally, thus it aims at combining financial report card with discussion

about the people aspect as well. The proposed study aims examine the attitude
and perception of employees towards merger., study the perspective of customers
and people sentiment in the context of merger.to analyze pre and post-merger
financial standing of merged PSU bank suggesting improvements and
recommendations to strengthen banking sector.

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 Chapter 2

Review of Literature
A review of literature is a type of scholarly work that provides a thorough synopsis of the
body of knowledge and comprehension regarding a certain subject. A literature review is
referred to as such because it includes a critical assessment of the content. The review
reckons, defines, summarize, assess and elucidate previous researches in the field. It
provides theoretical base for the research and assists to outline the nature of research. It
acknowledges the work of previous researchers, and provides a foundation for further
work during the process of research. ROL also helps researcher to identify the gaps in
research and identify the dimensions that can be added to research on topic at hand.

Thus, it helps to gain familiarity with the current body knowledge as well as
understanding the theories and concepts related to the chosen field, limitations of that
field and helps to formulate the research question. Lastly a carefully done review aids in
determining the tools and methods of data collection and analysis and avoids the risk of
duplication of work in the research process.

This study aims at determining whether mergers and acquisition of banks bears any
positive influence of the bank’s performance financially as well as operationally. For the
purpose of study, the recent merger of 10 PSU Banks that merged to form 4 large PSU
Banks has been considered namely;

Allahabad Bank with Indian Bank

Oriental Bank of Commerce and United Bank of India with Punjab National Bank

Syndicate Bank with Canara Bank

Corporation Bank and Andhra Bank with Union Bank of India

Previous researches in the field of M&As with special focus on banks both nationally
and internationally has been widely studied to understand the objectives, need for study,
research methodology and findings and conclusions.

29
The review of various researches over years in field of Merger & Acquisition are
discussed in this chapter.

Objectives of Review of Literature

 To study the history of mergers and trends in the context of M&A of banks

 To study the tools and techniques used for conducting research on financial
impact of merger.

 To determine the criteria that were applied to evaluate banks' financial standing
following mergers and acquisitions.

 To identify the gaps in research on the subject under study.

Review of Literature

Choudhury, Deepjyoti & Biswas, Abhinava & Acharjee, Tanmoy & Sonowal,
Jimpi. (2024)67 The announcement of the recent mega merger of the ten PSBs to four big
banks opened an opportunity to study how the mergers and acquisitions of the Indian
banks impacts the customers. This paper is also attempt to apprehend how the bank
mergers have impacted the customers. Customers are facing issues in their deposits and
loans, cheque Books, Money transfer, ECS instructions etc. from the merging banks as
the terms and conditions and rates are also being updated. It has enhanced customer’s
responsibility to stay proactive and get to know about the updated terms and conditions
from their respective banks to remain satisfied with the bank operations. Primary data
has been collected from 126 respondents through online questionnaire in geographical
area of Silchar city. In this paper; descriptive statistics, correlation and regression
analysis have been used to analyse the data and obtain the findings of the research. This
study paves the way of further studies on mergers and acquisitions from different
perspective.

Santosh Kumar (2024) This study aimed to examine the financial performance of four
acquirer banks that have gone under M & A with effect from 01.04.2020 by applying
CAMEL Models. The Annual report of banks from 2017-18 to 2022-23 has been used
for evaluation of financial performance that has been collected from the website of
banks. Data from 2017-18 to 2019-20 has been considered as pre-merger period and

30
Data from 2020-21 to 2022-23 has been considered as post-merger period. F-test and T-
Test has been used for analyzing and comparing pre-merger financial performance and
post-merger financial performance. The analysis concludes that all the acquirer public
sector banks have had a substantial enhancement in terms of financial performance
indicators based on CAMEL Models

Aditya Kumar (2023) investigated if the bank's merger improves stability, competition,
and the effectiveness of the financial sector. Additionally, using the Reserve Bank of
India dataset from 2009 to 2021 and the Panel Data Model, he investigated the link
between High-Powered Money and the six explanatory variables listed. The study found
that following the Indian banks' merger, High-Powered Money rose while the closing
balance of non-performing assets fell. High powered money was also found to have a
positive and substantial link with the capital-to-risk-weighted assets ratio, while having a
negative correlation with the credit-deposit ratio and the investment-deposit ratio.
Additionally, high powered money was found to have an encouraging correlation with
return on investments. These assessments indicate that Indian public sector banks have
turn out to be competitive, stable and efficient after the merger of banks.

Ganesh S Hosapeti, Dr. Renu Rathi (2023) This study aims at understanding merger
process in Indian banking sector that has led to cost reduction and increasing revenue. It
also analyses the trends in banks regarding the merger of banking sectors, to comprehend
various stimuli for merger and the ways in which merger affect financial performance
and operational efficiency, the study conclude that the process of merging has leads to
achieve global competitiveness & reduce the cost of operation and bad loans but in turn
badly affected on human resource of banking sectors.

Prof. Nagesh B, Dr. Sunil M Rashinkar (2022) The researcher observed M&A of
banking industries in India after independence. The Author adopted a descriptive
research method to define the effect of merger and acquisition on customer satisfaction
in public sector bank. According to the findings, the 14 IMAPSB elements have been
separated into two separate factors: Enhancement and Growth Factor and Innovation and
Goodwill Factor. The study concludes that most mergers and acquisition brings the
synergy to the Indian banks.

31
Musa Daryesh &Nizar Mohammad Alsharari (2022) The purpose of this study is to
identify the variables influencing the M&A process in the banking industry of the United
Arab Emirates (UAE)..The findings provide strong evidence by the factor analysis
(income, growth, survival, cost, diversification and risk that are important determinants
of consolidation process leading to success of M&A in the banking industry. This study
enhances our understanding of business combinations and explains the critical elements
that determine a bank's performance in the context of mergers and acquisitions. Based
on the report, fostering a culture of trust that controls bankers' conduct for both banks is
crucial for reducing agency and ethical problems and enhancing the effectiveness of the
UAE banking industry.

Dr. K. Yasmin, Dr. S. Sridhar, Dr. Y. Aqther Begam (2021) The study concentrates
on the perceptions of the customers on the underlying reasons behind the merger
&impact produced by the merger of Public Sector Banks. Majority of the respondents
agreed that there will be better deals offered by the bigger banks due to merger rather
than from small banks. Also they felt that implementation of programmes by the Govt. is
easily made possible and government can honor its commitments better through bigger
banks than smaller banks. Recapitalization of Public Sector Banks need not be done after
merger as the new entity have huge capital outlay with them and reduction in NPAs may
be seen as professional credit managers will be available to manage the situation.

Arun Kumar Rai, Kumari Preeti Yadav, Altaf Mallik and Piyush Gupta (2021)
examined the impact of the news about the merger of six banks into four major banks
through event study method. They found significant impact of merger announcements on
both the merging banks. While the bidder banks were impacted negatively, the target
banks have positive impacts on the day after the merger event, followed by negative
results afterwards. A sample of ten public sector banks, including and six target banks
four bidders were analysed using the SESM with the market model. Initially, the target
banks experience positive impact of the merger news followed by similar impact for both
banks within a few days. The post-announcement results were consistent with previous
studies (Pandey & Kumari, 2020; Rahman., 2018). The findings give the investors
proper insights into how merger events impact the market and what the investors should
expect.

32
Mark Elferink (2021) The banking sector has been examined in this study using both
accounting-based metrics (ROA, ROE, etc.) and market metrics (CARs). The financial
performance of US and European acquiring banks between 2000 and 2018 is examined
in this study. The results show that M&A activities including the acquisition of banks
lead to value increments, which are mirrored in improved accounting and market
performance following the merger. However, the outcomes significantly alter once US
and European banks are separated. M&A activity improves the financial performance of
US banks, while it has a negative impact on European banks.

Prasad DS (2021) The study examines the relationship between a few chosen behavioral
and demographic factors and how customers assess the quality of bank services with
regard to Indian commercial bank mergers. Papers from 37 referred journals and other
books published on the topic are reviewed by the study using the Systematic Literature
Review approach. A thorough content analysis reveals that the majority of the research is
empirical and that, in the context of mergers, brand equity, innovative capacity, and
customer relationship management (CRM) are the main elements determining how
customers perceive the service quality of commercial banks in India. In order to succeed
in India's increasingly competitive banking environment, it was determined that
segmental differences must be given the weight they deserve when developing marketing
strategies. It also found a correlation between customer perceptions of the service quality
of the merging commercial banks in India and demographic and behavioral factors.

Dania Al Najjar & Hamzeh F. Assous (2021) presented a study on the main factors
influencing deposit volume using the CAMEL grading system and a case study of banks
in Saudi Arabia. The study was divided into four stages: first, each bank's important
financial ratios from CAMEL's composites were calculated; second, each bank was
ranked from 1 to 11 for each of CAMEL's composites annually; and finally, the banks
were ranked based on the total CAMEL composite. The final step involves a regression
model with banks' total deposits as the dependent variable and CAMEL financial ratios
as the independent variable. The findings demonstrated that banks' total deposits were
positively impacted by capital as determined by CAR, liquidity as loans to deposits, and
earnings as determined by ROE and efficiency ratio.

33
Ganesh Bajgai and Prof. Dr. Radheshyam Pradhan (2021) The purpose of the study
was to find out how Nepali employees felt about mergers and acquisitions of banks and
other financial firms. Using questionnaires, a sample of 385 financial institution
respondents participated in the study. The findings indicate that the majority of
respondents had a favorable opinion of the role that mergers and acquisitions play in
enhancing service quality, raising bank credit ratings, fostering cross-organizational
culture, improving organizational performance, maximizing profits and revenues,
introducing new services and facilities, and putting new, creative ideas into practice. In
order to improve their performance and long-term viability, financial institutions have
been urged to pursue mergers and acquisitions.

Surya Rose (2021) This article explains problems faced by Indian public sector banks
after M&A in the context of the Mega-merger of 2020. This article discusses economic
growth and development of any nation post mergers and set forth merger as a useful
strategy to expand business. On the flip side it talks about tackling the demerits of
mergers such as unfavorable NPA ratio, redundancy of bank employees, diminishing
administrative efficiency, political pressures, and problems faced by customers diligently
and appropriately.

Apoorva Shukla and Akanksha Singh (2021) Using the CAMEL Model, this study
looks at the financial standing and performance of four public sector banks following
their merger: Punjab National Bank, Canara Bank, Union Bank of India, and State Bank
of India. Ratios, average, rank, and percentage are the statistical tools that are employed.
The four public sector banks that were chosen for the study were ranked based on their
overall financial performance, which included capital sufficiency, asset quality,
managerial effectiveness, earning quality, and liquidity. And lastly, Union Bank of India
ranked the last in this analysis needed to work upon its overall performance.
Additionally, statistical tools such as average, ratio, percentage, rank, and arithmetic
mean have been used to analyze the data. According to the report, all of the banks did
well following the mergers, with SBI, one of the biggest banks in Asia, ranking first
overall but lacking a competitive liquid position. In contrast, PNB has had to improve its

34
management effectiveness because it lags behind other chosen banks. Canara Bank,
which came in third, needs to raise the caliber of their earnings.

Shaifali Mathur (2021) through her paper aims to use the CAMEL model to examine
the effects of M&A on SBI's financial performance both before and after the deal. The
current study is predicated on secondary data from 2015–16 (pre-merger) and 2017–2018
(post-merger). It came to the conclusion that there were no noteworthy benefits to this
merger. The fundamental cause might be that, compared to deposits and earnings,
consolidation with weaker and less successful partners resulted in higher liabilities and
non-performing assets (NPAs). In order to achieve economies of scale and raise profits
above costs, the study suggested closing off operations that were inefficient and
unproductive.

Priyanka Jha (2021) The author intends to update participants with the fundamentals of
banking supervision, the primary CAMEL system metric used to assess a bank's overall
soundness and productivity. Additionally, it highlights how important the CAMEL rating
system is to the banking assessment procedure. The study brings out the benefits of the
CAMEL model in highlighting the essential areas of a bank in which analysts must
concentrate such as Capitals, Assets, Earnings, Efficiency, and Liquidity. The flexibility
of this model allows researchers to select the most appropriate ratios that are relevant to
problem in the give financial climate. The model offers a framework for selecting the
relevant ratios and establishing the standards by which the performance of each bank will
be evaluated

Gaurav Sisodia and Nilmani Tripathy (2021) This study compares SBI and its
associates' pre-post financial performance using the following metrics: return on equity,
debt-to-equity ratio, return on long-term funds, interest income to total income, and total
advances to total assets. The study is spread over four years with secondary data for two
years prior and two years’ post-merger. The results showed that every ratio had an
insignificant t-value; as a result, there were no appreciable changes between the pre-
merger and post-merger periods. These conclusions, however, are only based on
observations and do not accurately depict how the merger affected SBI.

Mohammad Mubarak (2021) studied the post-merger scenario of PNB bank, Union
Bank and Indian bank Canara bank, with the aim to analyse the efficiency improvements,

35
decrease of NPA and value creation and thus influence on Indian economy. This study
gave more emphasis to financial statement analysis in form of comparison between pre
and post-merger CASA ratio, Net NPA, CRAR, PCR, gross advances, employees and
branches etc.

This research concluded that the goal of consolidation was to produce global-scale banks
regardless of the difficulties encountered and to establish a system that would protect
weaker banks from the severe consequences of liquidation and dissolution. Because one
bank failure would result in the banking industry's collapse, the RBI was given the
authority to forcefully combine the weaker banks with the stronger ones. Thus
consolidation is a huge instrument to maintain liquidity, ensuring transparency in
business and effective administration. As the flip side a single bank would be exposed to
instable and unexpected system risk. The conclusion is that the combined bank's net
profit will be lower following the merger, and the stability of the banks is in doubt.
Therefore, in order to boost their profit and stability, which in turn raises the value of
their shares in the future, the new banks must take care of these characteristics.

This study however lacks on the account of availability of primary data and combined
study of other issues relevant to merger than just balance sheet numbers such as cultural
fit of combined workforce and customer satisfaction etc.

Pramod Kumar Singhal (2020evaluated public sector banks' performance and financial
standing, assigning them a ranking. Data from 21 public sector banks during a ten-year
period—from 2008–2009 to 2018–2019—has been gathered for this purpose using the
capital line database and the institutions' annual financial statements. The banks'
performance has been evaluated using the CAMEL model. The analysis's conclusions
showed that public sector banks are trying to keep their capital levels sufficient.
Following a thorough assessment of the risk exposure, public sector banks must develop
creative solutions to assist in the deployment of funds.

Anubha Jain (2020) plans to use the CAMELS score to identify areas for banks to
improve and focus on. Regression analysis of banks' FY19 financial data revealed that, in
terms of management and earnings following the merger, 10 merged banks perform
worse than the remaining 8 public banks. Due to their low return on assets, Punjab
National Bank and Oriental Bank of Commerce, the second-largest bank after the

36
merger, fail based on net profit per employee. The Indian-Allahabad merger is the best-
worst combination, and Union Bank's ROCE needs to be raised for the Union-
Corporation merger to have a positive post-merger impact.

Rangana Maitra (2020) This study aids in understanding how workers feel about their
new jobs in banks following mergers. The employees' perceptions of the new
organization's justice and fairness in relation to promotions will also be better understood
this way. Data was collected following the survey method from 6 banks having
branches in Mumbai Region and analyzed using Frequency Distribution, and one-way
ANOVA. This study found that bank employees' perceptions of their roles following
mergers were influenced by demographic factors such gender, age, job levels, salary, and
qualifications. According to the study's findings, the majority of respondents were in line
with the mission, understood what was expected of them in their responsibilities, and
frequently received praise or credit for their work.

Also there was no significant difference in the perception of employees on what was
expected from them with respect to their gender, age, income, qualifications, job level
and types of banks. Regarding the regular recognition of good work, it was found that
there was no significant variation in terms of gender, credentials, job levels, or income
groups; nevertheless, there were significant differences in terms of the age groups and
bank kinds of the employees.

P. R. Jeyalakshmi, A. S. Lakshmi Rani (2020) The study focus on customers and their
perception towards the merger and customer’s loyalty. According to this study, there was
a positive significant association between the M&A of Public Sector Banks and
employee perception, and a positive significant correlation between customer perception
and PSB M&A.The merger and acquisitions of banks had positive effect on Scale,
Efficiency, Business Gaps reduced, Technological Deployment and Talent and Team
Upgrade and negatively impacted- Poor work culture, Compliance and Risk Consistency
and Lack of Commitment.

Dr. Preeti Jain& Aastha Jain (2020) Analyze whether bank mergers affect the banking
industry's overall health and, ultimately, how they affect the Indian economy. They draw
attention to the necessity for the government to enhance the Insolvency & Bankruptcy
Code's implementation. Additionally, the IBC's "recovery" process has to be modified.

37
Furthermore, bank mergers in India combine the skills and cultures of various
organizations and lessen their shortcomings, which benefits the banking industry and the
economy overall. A merger is helpful in improving performance by counterbalancing
weaknesses of a bank. As observed in several instances, bank mergers also cause
increased use of technological tools. The synergy brought through merging also aids in
terms of customer reach, tools of operations, technology and diversified business for
each amalgamating bank.

Deeksha Sharma (2020) This paper review literature on merger and acquisition of
banks in India to know favorable and unfavorable impact of merger and acquisition on
the effective performance of banks with highlighting the reasons for the merger and
acquisitions of banks. Secondary data from related journal, websites and e-newspaper
has been considered for this purpose. It was concluded that positive effects have been
seen on merged bank.

Dharen Kumar Pandey & Vineeta Kumari (2020) carried out a study on a sample of
14 banks listed on NYSE & NSE to know the effects of M&A on stock prices. Measures
of dispersion and t-test determined that news of merger impact the stock price reaction
by generating abnormal returns around the date of announcement. The conclusions made
will assist investors in generating anomalous gains as a result of share price changes
sparked by merger news, as well as management in strategically planning mergers and
acquisitions. This study does not look at the behavior of share prices after mergers.

Prabhakar. K & Vasanth Ebenezer (2020) presented a study on recent developments

in the banking industry with respect to Public Sector Banks mergers that affected
customers and its stake holders. Post mergers of various PSBs’ have undergone
technological upgradation and changes in the management led to several unresolved
questions on the perception of customers and stakeholders towards these changes. In
order to understand the effect of the merger and technological developments undertaken
by the banks, demographic variables, merger related components and e-banking services
were studied and presented diagrammatically. The observations on the basis of data
shows that majority of selected population do felt that there was a positive change
towards the mergers of the bank and are willingness to accept technological upgradation.

38
Abhirami R, Akshara M S, Aparna Pradeep, K R Shabu (2020) This study helps to
know about the customer’s perception in the context of the merger of State Bank of India
and its subsidiaries. The study concluded that majority of customers (mainly female
respondents over 55%) were of the opinion that the mobile number registration was not
required, same net banking facilities could be availed after merger, the information about
the beneficiaries need not be updated, no change in service charges and the customers
were satisfied with the overall service quality of the bank. The study suggested that the
SBI should reduce the technical problems and maintain proper reporting system. The
charges levied by bank for not maintaining minimum balance have a negative impact on
the customers thus necessary changes should be made to reduce the burden on customer.
Efforts should be made to clarify the doubts of customers regarding re registration of
mobile number, usage of same net banking facility and updating details of beneficiaries
after the merger and lastly the net banking website should be made more user-friendly.

Swathi M.S, Reshma Reji and Jayashankar (2019) This paper undertakes to study the
impact of merger of SBI and its associates over a sample of 150 respondents randomly
chosen in Ernakulum city. The findings suggested that the merger was well received by
the customers and had a positive impact on the bank’s performance and thus on the
economy as a whole. It further suggested that in order to attain complete customer
satisfaction SBI should reduce chances of technical glitches and reduce bank charges.

Hussain Muhammad, Muhammad Waqas, Stefania Migliori (2019) investigated the

effects of M&A before and after on the bank's financial performance in Pakistan between
2004 and 2015. The results show that following M&A, the banks' liquidity, profitability,
and investment ratios all improved favorably and significantly. Nonetheless, the
solvency ratios show adverse consequences, primarily because the acquiring bank must
manage a larger debt load following M&A than it did prior to the transaction.

Ishwarya J (2019) This study examines mergers and acquisitions in the Indian banking
industry in order to understand the synergies and long-term effects of the merger. It also
studies the financial parameters and conducts a case study analysis of the merger of SBI
and its Associates, weighing the benefits and drawbacks for the bank's employees. M&A
deals are successful in the Indian banking industry, according to the findings. The
Government and Policy makers should not endorse merger among strong and distressed

39
banks as a way to uphold the interest of the depositors of distressed banks because it will
have adverse effect upon the asset quality of the stronger banks. Also the deterioration in
the performance of merging entities cannot be accredited to merger alone. Thus,
comprehensively overall mergers led to higher level of cost efficiencies for the merging
banks.

S. Indrapriya (2019 The author discusses M&A in relation to the regulatory framework,
RBI permission, forms of mergers, historical perspectives of M&A, and the impact of
M&A on the banking sector. A fair understanding of mergers and acquisitions, their
differences, their advantages and disadvantages, and the management of the subjective
factors that enhance employee performance are all provided by this study. It comes to the
conclusion that team identities and structural processes must be strategically altered in
order to achieve integration. Along with new structures, product mixes, and brand
names, the new identity also offers chances to cross-sell the newly gained accounts.

CMA Jai Bansal Dr. Gurudutt Kakkar (2018) In this study's corpus, the authors
attempt to examine the merger of State Bank with its five affiliated banks: Bharatiya
Mahila Bank, State Bank of Patiala (SBP), State Bank of Mysore (SBM), State Bank of
Hyderabad (SBH), State Bank of Bikaner and Jaipur (SBBJ), and State Bank of Patiala
(SBT). The study enlisted favorable aspects of merger - Shares of State Bank of India
(SBI) and its listed associate banks (State Bank of Bikaner, State Bank of Mysore and
State Bank of Travancore) gained 3-13 percent on the back of approval from the cabinet
for their merger; better management of outstanding loans in India’s banking sector and
SBI pass in into the list of top 50 global banks. However, there were a lot of unidentified
factors, such as problems with transfers, different working conditions, longer working
hours, employee redeployment or job loss, and so forth.

C. Dudhe (2018) This study employed the CAMEL strategy to analyze data from 2013
to 2017 using the one-way ANOVA method to assess the financial soundness and
performance of a few private sector banks, including ICICI, HDFC, and Yes Bank. In a
few chosen CAMEL ratios, it was found that, on average, ICICI held the top spot and
Yes Bank finished last..

Ullah Nazim and Abu Seman, Junaidah (2018) The authors evaluate over 30 studies
conducted between 1993 and 2017—a span of 20 years. This study looks at how much

40
M&A affects banking performance and highlights elements that make M&A activity
successful. Overall, the assessments indicate that M&A has a variety of effects on
Islamic banks.

This is explained by the varied ways that M&A is handled (domestic versus cross-
border) and the diverse variables that go into the choice to do so. Regarding the necessity
of a methodical effort on conceptual analysis in addition to empirical research on M&A
in Islamic banking and finance, the paper offers suggestions for future assessment.

Ashish.M. Joshi and Dr.K.G. Sankaranarayanan (2018) This paper examines the
various aspects of performance and reliability of the banks operating in various sectors
i.e. public, private and multi-state cooperative banks by using CAMEL model. From the
analysis of secondary data, it is observed that is out of 17 factors of CAMEL model, only
five factors show significant difference among the three sectors of banks. Further
investigation of the financial performance of the chosen public, private, and cooperative
sector banks reveals that the four main dependent factors influencing the banks' financial
performance are profit per employee, debt-equity ratio, total assets-to-total deposits ratio,
and net non-performing assets-to-total advances ratio.

Krishna Prasad Sharma (2018) The study uses a survey approach to evaluate how bank
mergers and acquisitions affect consumers. Customer satisfaction and service quality
post mergers have been measured by summative scale calculated by a simple arithmetic
mean and by using the weighted average method. Five point Likert-type scales used for
measuring the customer satisfaction level and further analyzed using SPSS and MS
Excel. According to the results, the merger was beneficial from the perspective of the
consumers in Nepal since it helped them with economies of scale, the expansion of areas,
innovations in technology, and competitive interest rates owing to the strengthened
capital base.

Sonia Singh& Subhankar Das (2018) conducted a study to assess the impact of merger
and acquisition on the performance of Banks in India. The impact of M&A’s has been
studied in three leading banks over a period of six years for pre and post M&A activity
with the help of financial parameters like, Net Profit margin, operating Profit and so on.
The study recommended that policies and strategies started by management such as
credit policy should be re-visited in order to improve internal and external operations, the

41
logistical structure support should be improved; broader approach to integrated
marketing communications mix should be adopted to gain more market share.

Tapas Kumar Sethy (2017) determined the technical proficiency of each State Bank
group bank by looking at the group's financial performance during the merger period. It
uses a technique that is not parametric to DEA from 2005 to 2016 and shows the
significant differences between the banks applying the Krushkal Wallis test and the
paired t-test. The analysis discovered that SBI, State Bank of Indore, State Bank of
Patiala, and State Bank of Saurashtra performed better during the study period and that
the merger improved State Bank of India's financial performance.

Magina Shrestha, Ram Kumar Thapa and Ram Kumar Phuyal (2017) A
comparative analysis of M&A's effects on financial results of Nepali banks and other
financial institutions was conducted. This study aims to assess how stakeholders perceive
the merger and compare the financial performance of the combined banking and
financial institutions to their pre-merger performance. The t-test of changes in
performance metrics has been performed in tandem with the financial ratio analysis and
comparison approach. In contrast to mergers between smaller BFIs, mostly those that do
not include commercial banks as bidders, this study found that mergers involving larger
and more stable partners, like commercial banks, have a beneficial effect on
performance. Most of the time after a merger, loan quality drastically declines, and
profitability as measured by ROA and ROE is negatively impacted. Thus, the merger
should not be considered as the sure shot solutions to overcome the challenges faced and
evaluation is needed to choose the right partners for executing the merger.

Yaduveer Yadav (2017) This study examines the connection between positive
anomalous returns for shares of companies undergoing mergers and acquisitions and
their announcement. by applying the techniques of event studies. The secondary data
evaluation of the acquiring company's share price fluctuations in relation to the market
index price movements forms the basis of this study. Four instances of major mergers in
the banking industry are examined and analyzed in order to assess the impact of a bank's
M&A announcement on stock price. The daily return of the event window is computed
and compared with the average period return of securities. It was noted that the acquirer

42
benefited from the acquisition agreements since they received a higher return than the
typical return on the bank's stock prices.

Jagjeet Kaur, Dr. Harsh Vineet Kaur (2017) This paper's primary goal is to use the
CAMEL model to analyze the financial health of Indian public sector banks. Ten years
of data from ten public sector banks (2004–05 to 2013–14) were collected for the study.
The BSE valuation was used to choose the public sector banks. Bank of Baroda and PNB
were rated as the most stable banks based on the Camel rating, while Indian Bank, IDBI,
Canara Bank, and SBI were rated as average, and Union Bank, Bank of India, Syndicate
Bank, and CBI were rated as beneath average and therefore required close control to
ensure their survival.

Susmitha M., Mouneswari V. (2017) applied Camel Analysis to analyze Syndicate

Bank's financial results. This study uses the CAMEL model to assess the Syndicate
Bank's financial performance. It was discovered that every ratio under the CAMEL
Model was sufficient. Consequently, Syndicate Bank's overall financial performance was
satisfactory.

Burhan Ali Shah & Niaz Khan (2017) investigated how mergers and acquisitions
(M&A) affected the acquirer banks' operational results in Pakistan. A sample of eighteen
transactions involving acquirer banks that were listed on the Karachi Stock Exchange
were used for the study. The consequences of M&A are ascertained through the
application of the Financial Ratio Analysis (FRA).

The significance of change in the operating performances is tested through a paired

sample t-test. The findings indicate a drop in the acquirer banks' post-merger efficiency.
It is well known that the majority of profitability ratios, such as ROE and ROA to total
assets, have decreased after the merger, with the exception of the negligible gains in net
interest margin and administrative expenditures to profit before taxes. The results show
that the post-merger efficiency of the acquirer banks has decreased. With the exception
of the insignificant increases in net interest margin and administrative expenses to profit
before taxes, it is commonly known that most profitability ratios, including ROE and
ROA to total assets, have declined since the merger.

43
Prof. Ritesh Patel & Dr. Dharmesh Shah (2016) investigated banks' financial
performance before and after the merger using the Economic Value Added technique and
additional financial metrics such as the average net profit margin, return on assets, ROA,
return on long-term funds, interest gained, and total assets. They came to the conclusion
that all banks do not necessarily need to use the same EVA strategy. Additionally, if
previous financial data is carefully examined prior to the merger, it may result in a better
financial performance for the bank following the merger.

Amit Mittal (2016) nvestigated 23 M&A deals in Indian banks between 2006 and 2015
for his project.In the global US and European markets, he also discovered compelling
evidence for bidder and target gains that might be used to define points of comparison.
The financial superstructure benefits from these advances, which are a result of global
policy imperatives, foreign bank withdrawals from India, and economic conditions that
favor greater mergers. In accordance to the study, short-term, narrow-minded reactions
to a new policy superstructure should not be used as an excuse for foreign portfolio
departures, which represent substantial opportunity losses for global participants. One of
the main conclusions was that the 2014 Kotak ING merger resulted in a 13.47% CAR
during the 0 to +15 occurrence window and a 23.8% CAR throughout the long-term
window till trading ceased in the India subsidiary of the ING Groups. The benefits that
major bidders receive from massive bank mergers are not lost in high-value transactions
or misunderstood in event studies. Target shareholders' appropriation of merger gains
and the carefully examined collection of transactions show how Indian Bank M&A
advances global banking M&A research.

Manjunath Narasagondar (2016) The study highlights need of consolidation and

challenges ahead in Indian Banking along with the role of the Central government in the
policy formulation essential for the growth of Indian Banking. The study included
voluntary efforts to consolidate when Times Bank and HDFC Bank merged in 1991,
when Bank of Madura merged with ICICI Bank, when ICICI merged with ICICI Bank in
reverse, when Centurion Bank merged with Bank of Punjab, and when Lord Krishna
Bank merged with Federal Bank. The study of the Indian banking sector revealed that
stability, return to shareholders, and stringent regulations make mergers and acquisitions
(M&A) essential. These elements also provide banks with the chance to expand into

44
larger international banks. Additionally, mergers are a strategic tool that can be
employed for strategic investments.

Mona Girnara (2016) This study examines the financial health of banks following
mergers and acquisitions, specifically focusing on ING Vysya and Kotak Mahindra
banks. The study comes to the conclusion that mergers and acquisitions in the banking
industry have several benefits, including higher customer bases, more branches, more
employees, expanded product and service offerings, more ATM networks, the
advantages of having competent workers, raised regional penetration, and higher deposit
and advance amounts. Conversely, there are a number of difficulties, including
monitoring nonperforming assets, disparities in interest and deposit rates, handling
employee discontent brought on by disparities in pay rates, etc. However, a broad client
base, increased profitability, enhanced liquidity, a beneficial influence on share prices,
and a rise in net interest income all contributed to the post-merger financial performance
improvement.

Dr. Jayashree R Kotnal (2016) The objective of this paper is to identify the several
reasons why banks in India consolidate. Financial metrics such as the debt-to-equity
ratio, return on capital employed, margin of operating profit, net profit margin, and gross
profit margin are used to analyze the financial performance of the combined banks
before and after the merger. return on investment. Data on mergers as well as
acquisitions since liberalization were gathered, and the statistical significance of ratio
analysis and the impact of mergers on bank performance were tested using the
Independent T-test. The analysis concludes by stating that the merger event had a
positive impact on the banks.

Dr. Sangita Ghosh (2016focused her investigation on the merger of Oriental Bank of
Commerce and Global Trust Bank. She examined the liquidity, profitability, efficiency,
and performance factors of Oriental Bank of Commerce and found that, although the
acquirer bank's profitability and efficiency had increased following the merger, Oriental
Bank of Commerce's liquidity position remained unchanged.

Dr. Meenakshi Sharma, Ms. Tanvi Gaur and Ms. Yamini Bansal (2015) Mergers and
Acquisitions has its affirmative as well as undesirable impact on customers, employees,
shareholders etc. This paper studies about the satisfaction level of customers after

45
Mergers and Acquisitions with reference to the case of Bank of Rajasthan merger with
ICICI bank. Mergers and Acquisitions brings out changes that make a big difference to
customers resulting in loss of even the loyal customers. The major findings of the study
were that the customers were contented with the transformation and happily endorsed the
mergers.

Malihe Rostami (2015) undertook to choose some important ratios pertaining to

CAMEL Analysis to evaluate bank’s performance of an Iranian Bank and compared the
calculated ratios to the industry average to assess organizational position in industry.
This study underlined the relevance of using CAMEL model to focus on crisis and
suggesting solutions in competitive environment.

Girija Bhusan Prusty (2015) The study highlights ways the acquisitions and mergers
impact both the competition and consumers. a fundamental investigation into combined
banks to ascertain how mergers and acquisitions raise the value of their stock. The study
analyzes seven cases of banks in the public and private sectors to demonstrate the effects
of mergers and acquisitions on Indian banks. The merger of Kotak Mahindra Bank with
ING-Vysya was found to be highly profitable in the private bank sector, with notable
increases in various financial aspects such as net operating profits, debt to equity ratio,
dividend payout ratio, ROA, and market price. However, as a result of State Bank of
Indore's high debt structure, the pattern is reversed for SBI, with little increase in market
price and a decrease in ratios.

In contrast to the unsuccessful merger with the Bank of Sangli, the ICICI-Bank of
Rajasthan merger was lucrative. The IDBI Bank and United Western Bank merger
completely failed and resulted in a losing position. Both banks' debt structures have
decreased as a result of the HDFC and Centurion Bank merger, and both banks'
profitability ratios increased. Therefore, it was concluded that mergers in various
contexts produced inconsistent outcomes and could not be regarded as a solution to
increase bank efficiency.

Johnson Yeboah Ernest K. Asirifi & Samuel Ampadu (2015) The purpose of this
research was to determine how M&A has affected Ghanaian consolidated banks' service
standards. The study's analytical and descriptive design aimed to understand the way
customers perceive service quality and the connection between service quality and

46
mergers and acquisitions. M & As had a favorable effect on the perception of total
service quality, according to an analysis of the primary and secondary data using an
ANOVA and T-tests. The researchers' findings demonstrate that M&A provides banks
and other financial firms with enhanced expansion and funding alternatives. By lowering
expenses and enhancing service delivery, this subsequently encourages economic
efficiency.

Chathuranga, B.H.D(2015) The study collected data on how employees felt about Sri
Lankan bank mergers. In order to determine whether banks may profit from mergers and
whether there is any level of satisfaction with the merger in the current organization, a
structured questionnaire was used to survey 150 bank employees in the Colombo district.
The primary conclusions imply that most workers were extremely content to remain
loyal to their current company for the duration of their careers.

The majority of workers believed that the bank would benefit from the merger in terms
of diversification, growth, and market leadership. The other staff members believed that
because of the low level of competition and cultural mismatch, the bank could not profit.
In the event that the merger involves a bank that is not functioning well, the bank may
have to absorb the losses, which could result in operational difficulties and fewer
prospects for employee advancement. Therefore, in order to combat the unfavorable
view of bank mergers, the study advises policymakers to implement training programs
and boost employees' trust in their job security.

June-Lisbeth Mugoa Adembesa (2014) The study looked at the different kinds of bank
mergers and acquisitions as a way to obtain a competitive edge and how they affected
worker productivity. The researcher used a quantitative study design to gather
information from Kenyan banks. According to the report, staff turnover, absenteeism,
and uncertainty are all consequences of mergers, which are typically stressful and
anxious times for both banks' workers. The study came to the conclusion that prior to
M&A, management must treat all employees equally and refrain from fostering a sense
of job insecurity.

It indicated that good communication is essential to ensuring that employees feel

included and part of the team. The study suggested that in order to reduce employee

47
turnover and boost productivity, organizations should give employees' perceptions the
weight they deserve.

Khatik S K and Kr Nag, Amit (2014) This study explores the viability of five Indian
nationalized banks. The CAMEL MODEL, which combines crucial metrics such capital
adequacy, asset quantity, leadership effectiveness, profitability, and liquidity, has been
used to assess these banks' performances. According to the study's findings, Bank of
Baroda takes the top spot, followed by Union Bank of India, Dena Bank, State Bank of
India, and UCO Bank, which came in fifth.

B. Rajesh Kumar, K.M Suhas (2014) The merger announcement created revenue-
creating activities, according to their analysis on value creation in Indian bank mergers.
Additionally, it raises shareholder wealth. According to a comparison of pre-merger and
post-merger operating performance using three models, there is no proof that mergers
enhance corporate performance.

Dr. Sanjay Rastogi and Vaishali Singh (2013) used the CAMEL model to carry out a
long-term research on the performance of banks in the public and private sectors. State
Bank of India, Punjab National Bank, HDFC Bank, and AXIS Bank—the top five Indian
banks—were in the sample. When compared to earlier research (in 2011), the findings
showed that private sector banks scored better across the board on all CAMEL metrics.
After five years, the study's findings reveal that HDFC Bank and PNB have held onto
their top and third-place positions, respectively, while Axis Banks and SBI have shifted
places. After five years, SBI, which had formerly placed fourth, rose to the second
position, while Axis Bank slipped to the fourth position.

Muneesh Kumar, Shalini Kumar and Florent Deisting (2013) Due diligence on three
stock characteristics—volatility, bidder banks' stock returns, and liquidity—has studied
the market's response to merger announcements in terms of their impact on stock returns.
It is assumed that the wealth of shareholders is influenced by volatility and liquidity.
Since 1999, the market's response to announcements of mergers in the Indian banking
industry have been analyzed in this article. It was decided that the bidder banks' returns
to shareholders were affected in a mixed way by the merger announcements.
Additionally, on other stock features, the merger announcement had little impact on the
bidder banks' share stability but had a partial effect on the volatility of their share prices.

48
Sorina Botis (2013) this study aimed to highlight the latest changes on the bank mergers
and acquisitions market in the U.S. and EU and on emergent market trends. The three
biggest French banks, Deutsche Bank, and other banks with large derivatives operations
have all witnessed notable increases in market risk-weighted assets. Although the Royal
Bank of Scotland and other restructured banks have significantly decreased their
exposure to market risk, cross-border risk-sharing is impacted by the internalization of
banking. It also exposed significant flaws in the way global banks have managed
financial risks and carried out their operations. Globalization presents both opportunities
and challenges for the global economy and international banking.The study's main
conclusions are that global banking operations play a significant role in the larger
process of financial integration and globalization. To make banks more desirable for
long-term investment, aggressive strategies can be adopted to overhaul their ownership,
structure, and incentives.

Iohannis Asimakopoulos & Panayiotis P. Athanasoglou (2013) The study focuses on

how European banks created wealth through mergers and acquisitions between 1990 and
2004. Bank stock price responses to M&A deal statements are analyzed for this purpose
by looking at all the variables that influence such responses. The results demonstrate the
creation of wealth in European banks, as acquirers receive tiny negative but non-
significant abnormal returns, yet targets' shareholders have benefited from positive and
considerable abnormal returns. In domestic M&As, particularly those involving banks
whose shares are listed on the stock exchange, the acquirers' shareholders seem to benefit
more than in cross-border or unlisted target M&As. Subsequently, it seems that acquiring
smaller, less efficient banks that generate more diversified income creates more value
than acquiring less efficient, liquid, and higher credit risk banks, even though the
relationship between abnormal returns and the banks' fundamental characteristics is
rather weak.

V.R Nagsai and Dr. Sultana (2013) The economic performance of the chosen banks is
evaluated in this research using pre- and post-merger financial parameters. The HDFC
Bank and Indian Overseas Bank financial ratios were compared before and after the
merger in order to figure out the effect of the t-test. The results of the IOB showed that
there was no significant variation in the gross profit margin, but there were substantial
differences in the net profit margin, operational profit margin, return on equity, return on

49
capital employed, and debt equity ratios. Other than a notable rise in the gross profit
margin, there were no notable differences in any of the financial parameters for HDFC
Bank.

Dr. V. R. Nedunchezhian and Ms. K. Premlatha (2013) In terms of the Capital

Adequacy Ratio, Managerial Efficiency Ratio, Earnings, and Leverage Ratio, the
research focuses on performance efficiency throughout the post-merger phase. Ratio
analysis and comparison are used to evaluate local banks' performance before and after
the merger (2003–2006 and 2008–2011, respectively). Additionally, the significance
differences between the financial performance prior to and subsequent to the merger
activity are ascertained using the paired sample t-test. The results indicate that there was
minimal improvement following the merger in the debt-to-equity ratio, growth rate of
total advances to total assets, equity capital to total assets ratio, dividend payout ratio,
and growth rate of return on assets ratio. After the merger, all of the chosen banks'
current ratios and quick ratios responded better. After the merger, the performance of the
chosen banks has improved overall in the majority of categories.

Mehroz Nida Dilshad (2012) The research applies an event study technique in Europe to
examine the market's functionality with regard to merger and acquisition announcements.
This study analyses 18 bank merger and acquisition transactions between 2001 and 2010
to look into the returns for target and acquirer shareholders. The outcomes indicate that
target banks saw abnormal returns on the day of the merger announcement, but the
acquirers' cumulative anomalous returns were short-lived.

Mishra Aswini Kumar, G. Sri Harsha, Shivi Anand and Neil Rajesh Dhruva (2012)
The intent of the paper is to use the CAMEL approach to examine the performance of 12
public and private sector banks in the Indian banking industry over an 11-year period
(2000-2011). It is determined that private sector banks are the best in terms of both
performance and soundness. Public sector banks with a poor track record of economic
soundness include Union Bank and SBI.

Devarajapp S. (2012) examined the financial results of Centurion Bank of Punjab and
HDFC Bank Limited using financial metrics. A study comparing the performance of
banks before and after the merger using data from the three years preceding the merger
suggested that, while net profit, operating profit, and return on capital continued to be

50
unaltered, the mean value of gross profit improved and the mean value of equity
increased. He came to the conclusion that merging into larger banks helps weaker
institutions survive.

K. Kalaichelvan (2011) examined the performance of banks before and after mergers
during the post-financial sector reform era, which spanned 1993–1994 to 2004–2005;
determined how security prices responded to the study organizations' announcement of
mergers and acquisitions decisions; and ascertained how staff members perceived about
the impact of mergers. . The reactions of the stock price on those amalgamated banks
was analyzed again by CMIE to determine trends and patterns in the UT of Pondicherry,
124 employees who had worked for eight merged banks both before and after the merger
were given stock and a questionnaire.

The main conclusions were that the financial performance of banks in the public and
private sectors did not significantly change their levels of liquidity or profitability when
they absorbed private limited companies. However, the banks' ability to make revenue
from their fixed asset investments has decreased in a shorter amount of time. The
combined banks' CAMELS rating indicated that private sector merged banks outperform
their public counterparts. The banking industry's merger announcements led to
considerably positive abnormal returns on target bank equities and marginally positive
cumulative abnormal returns on acquiring banks' stocks. Additionally, it implied that the
remaining workers of the combined banks had a favorable opinion of the merger efforts
their employer had undertaken.

.Dr. K A Goyal & Vijay Joshi (2011) highlighted the general banking situation in India
and the reasons behind banking industry mergers. Investigating the reasons behind bank
mergers and acquisitions with particular reference to the Indian banking sector was the
goal of this study. A sample of 17 bank mergers that occurred after liberalization were
chosen for this study, and the number of branches, geographic market penetration, and
merger benefits were all taken into consideration.

They considered M&A one of the most effective strategies for weak banks to develop
and survive by merging into larger banks. According to this report, local and small banks
struggle to stay up with the global economy; as a result, they require assistance, therefore
leads to mergers. Mergers were another strategy private banks adopted to grow their

51
businesses. Since the main banks have not yet fully explored India's rural markets,
mergers can expand their customer bases, increase their market share, and enhance their
networks across regional boundaries. The study included a number of issues, including
branch size, communication difficulties, shifts in operational strategy, employee and
customer perception, and more. For example, when the news of the Bank of the
Rajasthan and ICICI Bank Ltd. merger surfaced, BOR employees grew upset.

Research Gap

Earlier studies concentrated mainly on either the financial analysis on old pattern i.e.,
ratio analysis or share price movements to compare the pre and post M&A performance
of banks.

 The current examination intends to examine the financial aspects of the

influence of merger and consolidation (2020) on the basis recent financial
statements.

 Human viewpoints which is important to be taken into account have not been
given due importance.

 This study further steps forward to combine the financial aspects on banks
performance post-merger with human aspect in the form of inputs from
employees and customers of the bank in order to draw a larger and more
comprehensive picture of subject at hand.

Conclusion

The study aims to ascertain the impact of merger on the performance of banks and also
extends to understand the viewpoint of customers and employees in the context of the
most recent merger of PSU Banks (effective from 2020). For this purpose, the review of
above mentioned studies was undertaken to learn about the history, conditions leading to
merger, the financial parameters used under the studies, characteristics and approach of
CAMELS model and so on.

Additionally, several studies regarding the stock price movement in event of merger
were also studied. Most of the researches revealed that in the event of M&A that sick
units survived and geographically expanded post mergers with augmented market share,

52
better infrastructure and increase in customer reach through rural markets. The
perceptional study of customers revealed that the strategy of merger to revive failing
banks was welcomed openly by customers and they believed that post-merger they get
better service quality without increase in service charges. However, the employees faced
uncertainty in event of earlier mergers of banks such as SBI with its subsidiaries in terms
of job security, promotions and recognition by seniors and cultural fit. Very few studies
have been conducted on this merger event of 10 public sector banks merging to form 4
global sized banks post-merger announcement in 2019. Most of the studies were
conducted on either financial analysis of banks post-merger or stock price movement of
merged and merging banks after announcement of mergers. Thus this study aims to work
on latest data (2020-2021, 2021-2022) to compare and analyse the impact of merger on
CAMELS pattern in order to know the overall standing of merged banks post-merger and
compare it with pre-merger position. Also to present a more comprehensive picture
human aspect in the context of merger by studying the attitude of employees and
customers towards M&A strategy.

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 Chapter 3

Research Methodology
3.1.1. Objective 1: To examine the attitude and perception of employees towards
merger.

3.1.2. Objective 2: To study the perspective of customers and people sentiment in

the context of merger.

3.1.3. Hypothesis for objective 1 and 2 of study

3.1.3.1. Hypothesis (H0): There is no significant difference in attitude and

perception of work force towards PSU banks pre and post merger

3.2.2. Hypothesis (H0): There is no effect of merger on customer satisfaction and

loyalty post merger.

3.1. Presumptive analysis

Bank mergers are rare but when mergers take place they tend to have wide reaching
impact on the banks under merger particularly the employees and customers of these
banks face the implications. Upon merger the attitude and perception of employees
towards the organization change which brings in challenges to manage the employees.
“It brings in changes in organizational culture, and individual expectations among
employees. It also impacts the employees’ roles, responsibilities and overall job. Further,
mergers also affect the customers’ sentiment towards the bank. Merger also effect the
customers emotional connect, satisfaction and loyalty. Keeping these factors into
consideration there is a need to understand how mergers change the attitude and
perception of employees of bank and public and customers perception towards bank.

3.1. 4. Importance

The part of banks experience in mergers and acquisitions has been graved with various
issues resulting from ineffective integration of employees, who seem unwilling to merge.
While investments into these activities make up significant costs, banks are under
pressure to assure that their employees will adapt, remain loyal to their new employer,
and contribute to the development of a united, efficient workforce. Therefore, examining

54
employees’ attitudes and perceptions seems to be crucial in order to get deeper insight on
how people feel and whether they are against mergers. We, thereby, firmly believe that it
is essential for banks to assess these opinions to be able to work out related strategies and
tactics for managing change and streamlining employees’ transition to the new entity.

Similarly important is to test the perspective of customers and people sentiment in the
context of merger. Customers and people are important for a bank as they are the
consumers of services of banks. Therefore, it is important to test how customers and
people react to the merger in terms of public perception. It is also important to how post
merger bank keep on regarding customer satisfaction and loyalty.

3.1. 5. Scope

The first objective of the study covers many aspects of employee experiences and
organizational dynamics during mergers. There are several parts to be considered, such
as the interestingness of job, leadership styles, organizational culture, and individual
expectations among others. By understanding employees’ attitude and perception banks
have the opportunity to learn how their employees view the merger and what it could
mean for their roles and careers. It is also possible to find general patterns to which
people from different demographics, such as age, tenure, or department, could belong,
which would also provide valuable insights. Asking employees about their perspectives
and how they are going to handle the change helps managers cultivate an atmosphere
that supports cooperation and integration, as these are the key factors behind the
merger’s long-term success and the organization’s well-being in general.

The second objective of the study tries to understand the customers and people sentiment
in the context of merger. Interestingly, in this part we try to understand peoples’
perception of bank’s performance post merger. Specifically, we try to understand how
people see merger of banks as a benefit to society in terms of creation of new
opportunities, new avenues for growth, jobs and creation of new schemes for people. In
this part we also try to examine weather merger of bank would lead to better customer
satisfaction and loyalty among consumers. This would help banks understand how to
create satisfied customers with best loyalty for the bank.

55
3.1.6. Research Design

The research design aims to create an appropriate structure for a study. A critical step in
the research design process is the selection of a proposed research approach because it
determines how relevant information for a study will be gathered. However, the research
design process necessitates numerous interconnected judgments’ (Aaker et al., 2000).
"Research design is the plan, structure and strategy of investigation conceived, so as to
obtain answer to research question and control variances". Besides it serves as a platform
for data gathering, measurement, and analysis.

The study adopted quantitative exploratory approach to investigate the employees’

attitudes and perceptions toward organizational merger and also to study customers and
people sentiment in the context of merger. Mergers are significant events for the
organizations, and they heavily impact employees’ roles, responsibilities, workplace, and
overall job. Due to the complex nature of mergers that includes psychological, cultural,
and organizational change, the quantitative approach is necessary to fully examine the
multifaceted dimension. Further, mergers also affect the quality of services provided by
the banks and thereby affecting its consumers. In this direction also quantitative
exploratory approach, allows for the full-seal multi-dimensional analysis of the impact of
merger on customers emotional connect, satisfaction and loyalty. Since the merger
process affects the whole organization, and its final decisions are essential, employee and
customers’ narrative should provide an understanding of how they see the change and
how it impacts their engagement with the organization.

In order to meet the aim and objectives of the study, the research will use structured
questionnaire with the employees representing all levels of the banks. The interviews
will be held with the representatives of senior executives, middle management, and
bottom-level floor staff to capture the range of opinions and perceptions toward the
whole process of merger. Structured questionnaire, in this case, will offer the possibility
to handle various aspects of the employees’ experience, to allow them to express their
thoughts and concerns about that merger process fully. It will also allow capturing the
diverse and often unexpected employee reactions to organizational changes. This method
will allow capturing the dynamics inside groups, overall fears and concerns, as well as
themes relevant to the whole period of merger. Further, study would also administer

56
structured questionnaire to the customers of the banks. Those people that were customers
of the bank pre and post merger would form the part of sample. This would help
consumers rate their experience with the bank both pre and post merger and would
highlight the perception of consumers towards services of banks pre and post merger.
Additionally, the study will analyze internal organizational reports to better understand
the merger’s strategic and operational framework. It will allow the study to complement
information the researchers have gathered from employees and from consumers.

Quantitative exploratory research allows for being flexible in terms of what to consider
as important data that can vary as the study unfolds. These are not unusual during
mergers and can include, but are not limited to, changes in leadership, new approaches to
a company’s culture, and employees being unsure of their job safety. The purpose of the
exploratory approach is to consider all these factors as equally important. Since attitude,
based on the analyzed research, inclusive of this one, is one of the driving success factors
of the merger, it is essential to attempt to understand it. The described research will offer
a new perspective of a merger, determine new support mechanisms that are most
effective, and contribute to the understanding of what kind of attitude can facilitate or
impede the process. Most importantly, this research will provide new knowledge about
how employees and customers perceive and deal with the challenges mergers bring. It is
significant because such knowledge can ultimately help organizations develop new
employee and customer-oriented strategies dealing with their perceptions and concerns
that will contribute to the growth and stability of organizations.

3.1.7. Sampling

For first objective of the study, the respondents were the employees of 4 PSU Banks that
merged to form 4 larger banks namely Allahabad Bank with Indian Bank, Oriental Bank
of Commerce and United Bank of India with Punjab National Bank, Syndicate Bank
with Canara Bank and Corporation Bank and Andhra Bank with Union Bank of India.
For being considered as the part of sample these employees should either be actively
involved in the merger process or have substantial knowledge of organizational mergers.
The study adopted purposive sampling technique to select the respondents as the sample.
This technique was adopted in order to serve the purpose under hand and this sampling
technique helped to select the respondent that was purposefully engaged in the process of

57
merger. Considering the universe of population, this study would collect data from 125
employees of the above-mentioned banks.

For second objective of the study, the respondents were the customers of 4 PSU Banks
that merged to form 4 larger banks namely Allahabad Bank with Indian Bank, Oriental
Bank of Commerce and United Bank of India with Punjab National Bank, Syndicate
Bank with Canara Bank and Corporation Bank and Andhra Bank with Union Bank of
India. For being considered as the part of sample these customers should have continued
to be the customer of bank pre and post merger. For this objective, the study adopted
snowball sampling technique to select the respondents as the sample. This technique was
adopted in order to make it easy to identify the consumer that used services of the bank
pre and post merger. Considering the universe of population, this study would collect
data from 150 consumers of the above-mentioned banks.

3.1.8. Sources of Information

In this study, primary and secondary data was collected to gain an understanding of
employees’ attitudes and perceptions in regard to mergers and perspective of customers
and people sentiment in the context of merger. The secondary data allowed the
researcher to analyze the information provided by the actors of the mergers at different
organizational levels, including that from key organizational reports and the literature
concerning the merger. Secondary data also include internal reports on restructuring and
human resource reports. Some of the most valuable metrics, in this case, will be the
employee attrition rate, as well as job satisfaction and productivity data. In addition,
surveys of employee satisfaction, including those conducted during and after the merger,
will be studied to understand to what extent employee perceptions of the merger have
coincided with reality. Policy documents explaining, for example, how to change
organizations, including decision-making, and documents explaining how the
organization can go through organizational change, which will be reviewed as secondary
sources of data, will also be analyzed.

Primary data was collected through structured questionnaire administered to the

employees and customers of banks involved in merger. The employees’ selection will be
based on the consideration which involves representatives of multiple roles within and
between merging organizations. For instance, senior executives, middle-level executive

58
and lower-level executives were given questionnaires to fill. The customer selection was
based on the premise that they continued to be the customers of the bank post-merger.

3.1.9. Techniques of Gathering Information

Primary data was collected through structured questionnaire administered to employees

and customers of banks involved in merger. Two structured questionnaires were framed,
one for employees and one for customers. The structured questionnaire contained two
parts, the first part contained questions related to demographic information of employees
and customers. The second part in the employee related questionnaire contained
statements on attitude of employees’ pre and post merger and the third part contained
statements on perception of employees’ pre and post merger. Further, the second part of
the employee questionnaire contained statements on public perception of bank’s
performance post merger and the third part contained statements on customer satisfaction
post-merger and the fourth part contained statements on loyalty post-merger. The
questionnaire was administered to employees and customers using online google forms.

3.1.10. Analysis of data

In order to examine objective 1 and 2 of study, a variety of tools and techniques was
used, with independent-t test serving as the main one for objective 1. It was effective in
revealing the underlying patterns differences in the data. For objective 2 regression
analysis was performed to check the impact of merger on public perception, customer
satisfaction and loyalty. In addition, graphical and descriptive evaluation was done
wherever it was deemed necessary.

3.1.11: Limitations of study

Although this study tried to examine the attitude and perception of employees’ pre and
post merger, there are certainly few more factors that might change on account of merger
for instance efficiency of organization. Also mergers might enhance the serviceability of
the bank. These factors have not been considered in this study and might be taken up in
future research. Also, the study has only focused on bank mergers and not other type of
organizations. Future research can be done considering other type of organizations as
well.

59
3.2. Presumptive analysis for difference in financial standing

Since 1991, the Indian banking system has undergone a complex but thorough reform
and restructuring process. The overall banking landscape has changed dramatically in
recent years as a result of the adoption of the Narasimham Committee Report and other
reforms. Furthermore, Base-III norms were introduced. The entire reform process has
been done with the goal of making the banking sector more sound, efficient, and
internationally competitive, as well as connecting it to the economy in order to promote
savings, investments, and overall inclusive growth. Towards this direction the "CAMEL"
framework model was adopted to estimate the financial health of the banks.

3.2.3. Importance

The CAMEL rating is a supervisory rating system that was designed in the United States
to assess a bank's overall status. It applies to all banks and credit unions in the United
States and is also being adopted by several banking supervisory bodies outside of the
country. On November 13, 1979, the federal financial institution examination council
accepted the standard financial institution rating system, often known as the CAMEL
rating, which was later adopted by the National Credit Union Administration in Act,
1987. The ratings are based on a ratio analysis of the financial statements. The Banking
Regulation Act of 1949 authorizes the Reserve Bank of India to inspect and supervise
commercial banks. These abilities are carried out through on-site inspections and off-site
surveillance. In November 1994, the RBI Establish the Board of Financial Supervision
(BFS) to provide integrated oversight of all credit institutions. The entire supervisory
structure was reorganized to meet the changing needs of a strong and stable financial
system. In January 1995, the Board of Financial Supervision formed an audit
subcommittee whose primary job or goal is the improvement of various auditing
functions and processes. The Reserve Banks of India organized a working group in 1995,
chaired by Shri S. Padmanabhan, to review the entire banking supervision structure. The
committee's recommendations led to the implementation of the "CAMEL" Model, later
renamed "CAMELS," as a grading system for banks beginning with the July 1998 audit
and inspection cycle. The committee proposed that banks be graded on a five-point scale
(1 to 5) using the principles of the international "CAMEL" rating scheme.

60
The primary reason for using the CAMELS score to analyze the pre- and post-merger
financial standing of merged Public Sector Undertaking banks is that it allows for a
comprehensive assessment of financial health based on various indicators. In particular,
the analysis focuses on, Capital Adequacy, Asset Quality, Management Efficiency,
Earnings Quality, Liquidity, and Sensitivity to Market Risk, which can be vital in
evaluating the effect of mergers on the stability and efficiency of banks. For this reason,
the CAMELS ratings can be positively validated and can be further pursued for
analyzing the credit standing of the banks. The benefits of this situation may also extend
to increased confidence from investors and bank clients, who can remain satisfied that
their funds are secure within these institutions. At the same time, those who lack
understanding of financial indicators will not appreciate the importance of upholding the
CAMELS system as it is largely irrelevant to their experience.

3.2.4. Scope

This objective is wider than only being an evaluation of financial metrics. It helps to
understand overall effects on the Indian banking sector that mergers might have. As the
study is trying to identify specific trends for this indicator, it is possible to determine
whether effects are long-term. Further, given information of the pre-merger and post-
merger performance, it is possible to elaborate the exact reason for the changes. The
"CAMEL" methodology aims to accurately and consistently analyze a bank's financial
health across important areas such as capital, asset quality, management, earning quality,
and liquidity. Muhammad (2009) asserts that "the strength of all these factors would
measure the overall strength of the bank." The quality of each component demonstrates
the inner strength and ability to protect itself against market danger." Furthermore, as
more mergers of banks happen, establishing a consistent methodology for measuring or
assessing the overall financial performance of banks is critical for financial markets in
general, and the banking sector in particular. The "CAMEL" approach of rating also
gives major compliance data or information required by authorities. This information
enables them to determine the scope of supervisory concern and respond in a timely
manner to reduce the negative consequences on bank merger.

61
3.2.5. Research Design

For this objective, the research design was carefully constructed to allow for a complete
and nuanced analysis of the financial health of the public sector undertaking banks both
before and after mergers. This decision was predicated on the dire necessity to
understand whether mergers have an impact on the financial positions of public sector
undertaking banks because of the heavy restructuring these processes usually entail. That
is, mergers change the dynamics of operations, asset holding, and general strategies, so it
is imperative to assess their implications quantitatively. As such, I decided to adopt a
quantitative approach for the sake of this objective. Indeed, this choice was viable due to
the numerous advantages of quantitative research over its qualitative peer in the sphere
of numerical data analysis and synthesis.

At its core, the chosen approach offered a range of opportunities for an accurate
examination of the quantitative data available to the researchers. In this way, a
quantitative methodology is beneficial when it comes to the analysis of financial metrics
due to the fact that it offers a party to the research an opportunity to formulate a response
to a particular question using statistically validated data. Therefore, for the objective, we
aimed to create an opportunity to produce qualitative conclusions about the implications
of mergers for public sector undertaking banks by using the available quantitative data.
As such, the chosen concept was appropriate for the purpose of the research. Another
benefit of the selected approach was that it allowed for the collection of vast troves of
data. As such, the approach followed in the study oriented at the opportunity to assess the
position of every public sector undertaking bank before and after the mergers on all of
the variables measured in this study.

3.2.6. Sampling approach

The research design for the objective “To use CAMELS score to analyze pre and post-
merger financial standing of merged PSU banks” included data collection methods. The
sample for the study has been four PSU banks that were involved in merger Allahabad
Bank with Indian Bank, Oriental Bank of Commerce and United Bank of India with
Punjab National Bank, Syndicate Bank with Canara Bank, Corporation Bank and Andhra
Bank with Union Bank of India.

62
The analysis of merged PSU banks’ financial data and comparing them pre and post
merger enabled ensured accurate level of contextualization, and the information about
qualitative research was used to better understand how to assess the application of the
CAMELS framework for the needs of the current study.

3.2.8. Sources of Information

Since this objective revolves around the determination of financial health of banks pre
and post merger, we therefore has to base our analysis on firm level data. Quantitative
firm-level data on CAMELS before and after the merger has been collected from CMIE
Prowess database and we obtained the information for the bank before the merger from
Regulators Statement and for post-merger banks from their published financial data and
management. The data for the study has been obtained for the period 2017 to 2023.

3.2.9. Variables used:

“CAMEL” Model measures banks on the following five parameters that include Capital
Adequacy, Asset Quality, Management Efficiency, Earning and Liquidity.

3.2.9.1. Capital Adequacy: Capital adequacy refers to the amount of capital required to
balance a bank's risk exposure, including credit, market, and operational risks, in order to
absorb any losses and safeguard debt holders. Capital adequacy measures the bank's
overall financial situation and ability to satisfy the requirement for additional capital.
Bank capital adequacy is determined by the capital-to-risk weighted assets ratio (CRAR).
A strong capital adequacy ratio or position boosts the confidence of various stakeholders
in the bank.

3.2.9.2. Asset Quality: It takes into account the percentage of bank loans that are non-
performing assets (NPAs). The main or primary rationale for measuring asset quality is
to determine the composition of NPAs as a percentage of total assets. It also tracks the
movements of NPAs. The gross non-performing loans to gross advances ratio indicates
the quality of bank management's lending decisions. Higher NPAs indicate that loans
issued by banks are of worse quality. It has two effects: one, it increases the provision
and reduces profit, and second, it affects banks' internal accruals in the form of lower
profit. As a result, banks are adversely affected.

63
3.2.9.3. Management Efficiency: It refers to a subjective analysis used to assess
management performance. There are various measures that show management's
performance, such as business per branch, net profit per employee, Return on net worth,
non-interest expenses to total assets, etc. Higher non-interest spending ratios (which
encompass a variety of expenses) indicate that bank management is unable to limit some
unnecessary expenses.

3.2.9.4. Earning Quality: This grade reflects not only the quantity and direction of
earnings, but also the elements that may have an impact on earnings sustainability. It
refers to the bank's net profit after accounting for all circumstances. Higher earnings
indicate a robust bank's performance, but it's vital to note that these earnings are
primarily from lending operations, which generate interest revenue. Non-core businesses
such as treasury operations, investment advisory services, and corporate consulting
services contribute significantly to a bank's earnings, making this component
increasingly important. As a result, revenue from core banking activities is critical.

3.2.9.5. Liquidity: Liquidity is a key parameter for evaluating a bank's performance.

This statistic determines a bank's ability to pay its liabilities as and when they mature.
Higher liquidity suggests that the bank will be able to meet any untimely withdrawals
from depositors. Not only that, but during a liquidity constraint in the market, banks can
earn good interest revenue in the call money market as well. There must be sufficient
liquidity sources for current and future needs, as well as the availability of assets that
may be easily converted into cash without incurring significant losses. A bank's liquidity
can be measured using a variety of ratios. Indian banks are graded using the Reserve
Bank of India-approved "CAMEL" supervision rating mechanism.

3.2.10. Analysis of data

In this study, multiple tools and techniques were used to analyze the PSU’s banks’
merger pre- and post-merger financial performance results. One of the key statistical
tools used for this purpose was the paired sample t-test, which allowed determining
whether the difference in the chosen key financial indicators before and after completion
of the two merger events was statistically significant. This testing procedure was used to
assess the changes in the capital Adequacy, Asset Quality, Management Efficiency,
Earning and Liquidity. The t-test determined whether the means of these indicators could

64
be considered different in the pre- and post-merger period, evaluating whether the banks’
ability to absorb the financial risks increased, the merged banks became more profitable,
and their liquidity levels rose. This testing method allowed analyzing the two mergers’
impact on the critical indicators and deriving the information necessary to make a
conclusion about the mergers’ beneficial or adverse effects.

3.2.11. Limitation of the study on account of CAMELS analysis

The key limitations of study revolve around the sample. This study used four PSU banks
that were involved in merger Allahabad Bank with Indian Bank, Oriental Bank of
Commerce and United Bank of India with Punjab National Bank, Syndicate Bank with
Canara Bank, Corporation Bank and Andhra Bank with Union Bank of India, however
many other banks were involved in merger. Future study can be conducted to determine
the financial strength in those banks post-merger. Further, future study can also be
conducted on mergers of other form of organizations.

65
 Chapter 4

Data Analysis and Interpretation

4.1. Demographic profile of employees

Table 4.1 presents the demographic profile of respondents. We find that male
respondents are equal to 56 percent (n=70) and females are equal to 44 percent (n=55).
With regard to age we find majority of the respondents belong to age group 35-45 (n=67;
53.6 percent). Further, 36.8 percent of the respondents (n=46) belong to age group 25-35.
Also we find that 9.4 percent of the respondents (n=12) belong to age group above 45.
With regard to marital status we find that 48 percent of the respondents (n=60) are
married and 52 percent of respondents (n=65) are unmarried. Further, with regard to
qualification we find that 36 percent of the respondents (n=45) are UG qualified, 44
percent (n=55) are PG qualified and 20 percent (n=25) have qualifications other than UG
or PG. Lastly, with regard to banks under consideration, we find that 24 percent of
respondents (n=30) are from Indian Bank, 23.2 percent of respondents (n=29) are from
Punjab National Bank, 25.6 percent of respondents (n=32) are from Canara Bank and
lastly 27.2 percent of respondents (n=34) are from Union Bank of India.

Table 4.1: Demographic profile of respondents

Frequency Percentage

Gender Male 70 56

Female 55 44

Age 25-35 46 36.8

35-45 67 53.6

Above 45 12 9.4

Marital Status Married 60 48

Unmarried 65 52

65
 Qualification UG 45 36

PG 55 44

Other 25 20

Working Place Indian Bank 30 24

Punjab National Bank 29 23.2

Canara Bank 32 25.6

Union Bank of India 34 27.2

4.2. To examine the attitude of employees towards merger

In this section, we tend to examine the attitude of employees towards merger.

Specifically, we asked them to fill the questionnaire on same statements pre and post
merger in order to check if significant difference exists in employees attitude pre and
post merger. In Table 4.2a and figure 4.1, we present the respondents views with regard
to their perception on job being interesting pre and post merger. We find that post-
merger employees feel that their job is more interesting as the frequency values of
strongly agree and agree increase. For pre-merger 16 respondents strongly agree while as
for post-merger 39 respondents strongly agree. Similarly, for pre-merger 54 respondents
agree while as for post-merger 64 respondents agree with job being interesting. Further,
to verify this claim statistically, we do an independent t-test, the results of which are
presented in Table 4.2b. We find that t-value is significant at 1 percent level of
significance, implying that significant difference exists in attitude of employees
regarding interestingness of job pre and post merger.

66
Table 4.2a: Do you feel your job is Interesting?

Pre-Merger Post-merger

Strongly Agree 16 12.8 Strongly Agree 39 31.2

Agree 54 43.2 Agree 64 51.2

Neutral 28 22.4 Neutral 10 8.0

Disagree 23 18.4 Disagree 10 8.0

Strongly Disagree 4 3.2 Strongly Disagree 2 1.6

Figure 4.1: Frequency of do you feel your job is Interesting?

60 70

60
50

50
40
40
30
30

20
20

10 10

0 0
Strongly Agree Agree Neutral Disagree Strongly Disagree Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.2b: Independent t- test on do you feel your job is Interesting?

Mean Std. Deviation t-value

(p-value)

Pre-merger 3.4400 1.03488 -4.696

Post-merger 4.0240 .92861 (0.000)

67
 Further, in Table 4.3a and figure 4.2, we present employees views with regard to distress
caused by the work environment. We find that post-merger distress of the work
environment has decreased as the frequency of strongly agree has fallen sharply from 36
in pre-merger to 8 in post-merger. Also we find that the frequency of agree number has
fallen from 64 in pre-merger to 57 in post-merger. We also tend to verify this claim by
using independent sample t-test, the results of which are presented in Table 4.3b. We
find that the t-value is significant at 1 percent level of significance thereby implying that
significant difference exists in employees’ perception of distress caused by work
environment pre and post merger.

Table 4.3a: Do you feel Distressed due to the work environment?

Pre-Merger Post-merger

Strongly Agree 36 28.8 Strongly Agree 8 6.4

Agree 64 51.2 Agree 57 45.6

Neutral 12 9.6 Neutral 37 29.6

Disagree 9 7.2 Disagree 18 14.4

Strongly Disagree 4 3.2 Strongly Disagree 5 4.0

Figure 4.2: Frequency of do you feel distressed due to the work environment?

70 60

60
50

50
40

40
30
30

20
20

10 10

0 0
Strongly Agree Agree Neutral Disagree Strongly Disagree Strongly Agree Agree Neutral Disagree Strongly Disagree

68
 Table 4.3b: Independent t- test on do you feel distressed due to the work
environment?

t-value
Mean Std. Deviation
(p-value)

Pre-merger 3.9520 .98256 4.854

(.000)
Post-merger 3.3600 .94528

Next we report the respondents’ views on their excitement while coming to your job pre
and post merger. These results are reported in Table 4.4a and Figure 4.3. From the
figures presented in Table 4.4a and figure 4.3 we find that employees are more excited
for coming to the job post-merger. We find that there is a significant increase in number
of respondents who reported strongly agree (n=7) pre merger and (n=35) post-merger.
However, we find that frequency of respondents with agree remains almost same pre and
post-merger. We also do independent sample t-test to confirm is significant difference
exists in the respondents view with regard to excitement towards job pre and post
merger, these results are reported in Table 4.4b. We find that t-value is significant at 1
percent level of significance, implying significant difference exists with regard to this
statement pre and post merger.

Table 4.4a: Do you feel Excited while coming to your job?

Pre-Merger Post-merger

Strongly Agree 7 5.6 Strongly Agree 35 28.0

Agree 44 35.2 Agree 49 39.2

Neutral 31 24.8 Neutral 16 12.8

Disagree 36 28.8 Disagree 22 17.6

Strongly Disagree 7 5.6 Strongly Disagree 3 2.4

Figure 4.3: Frequency of do you feel excited while coming to your job?

69
50 60

45
50
40

35
40
30

25 30
20

15 20

10
10
5

0 0
Strongly Agree Agree Neutral Disagree Strongly Disagree Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.4b: Independent t- test on do you feel excited while coming to your job?

t-value
Mean Std. Deviation
(p-value)

Pre-merger 3.7280 1.12433 4.836

Post-merger 3.0640 1.04530 (.000)

In this section, we report respondents view on weather supervisors behavior made them
upset pre and post merger. The results of this statement is presented in Table 4.5a and
figure 4.4. We find that there is the significant drop in number of respondents who
strongly agreed with this statement pre-merger (n=31) and who strongly agree post
merger (n=4). Similarly, there is a significant drop in number of respondents who agree
with this statement pre-merger (n=67) and who agree with this statement post-merger
(n=16). From these results it can be concluded that post-merger employees feel that their
supervisors behavior have been much pleasant. We also do an independent sample t-test
to determine the statistical difference in supervisors behavior pre and post merger. These
results are reported in Table 4.5b. We find significant t-value in Table 4.5b, implying
that there is a significant difference in supervisors behavior pre and post merger.

70
Table 4.5a: Did Supervisor behavior make you Upset?

Pre-Merger Post-merger

Strongly Agree 31 24.8 Strongly Agree 4 3.2

Agree 67 53.6 Agree 16 12.8

Neutral 14 11.2 Neutral 26 20.8

Disagree 13 10.4 Disagree 58 46.4

Strongly Disagree - - Strongly Disagree 21 16.8

Figure 4.4: Frequency of did supervisor behavior make you Upset?

80 70

70 60

60
50

50
40
40
30
30
20
20

10 10

0 0
Strongly Agree Agree Neutral Disagree Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.5b: Independent t- test on did supervisor behavior make you Upset?

t-value
Mean Std. Deviation
(p-value)

Pre-merger 3.9280 .88149 12.773

Post-merger 2.3920 1.01518 (.000)

We report the respondents view with regard to the statement that does their job skill
match the requirements in Table 4.6a and figure 4.5. We find significant rise in strongly
agree view for this statement from the respondents from pre-merger to post-merger. Only

71
 1 respondent strongly agreed with this statement pre-merger but 16 respondents strongly
agree with this statement post-merger. Similarly, only 13 respondents agreed with this
statement pre-merger but post-merger 54 respondents agree with this statement. These
results imply that post-merger Banks have been able to match the employees’ job skills
with the job requirements. We also do independent sample t-test to check statistical
difference in the respondents views on this statement pre and post merger. These results
are reported in Table 4.6b. We find significant t-value, implying that significant
difference exists in employees’ perception regarding the statement that their job skill
matches the requirements pre and post meger.

Table 4.6a: Does your job skills strongly match to your job requirement?

Pre-Merger Post-merger

Strongly Agree 1 .8 Strongly Agree 16 12.8

Agree 13 10.4 Agree 54 43.2

Neutral 21 16.8 Neutral 30 24.0

Disagree 58 46.4 Disagree 23 18.4

Strongly Disagree 32 25.6 Strongly Disagree 2 1.6

Figure 4.5: Frequency of does your job skills strongly match to your job requirement?

70 60

60
50

50
40

40
30
30

20
20

10
10

0 0
Strongly Agree Agree Neutral Disagree Strongly Disagree Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.6b: Independent t- test on does your job skills strongly match to your job
requirement?

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 t-value
Mean Std. Deviation
(p-value)

Pre-merger 2.1440 .94787 -10.842

(.000)
Post-merger 3.4720 .98845

In this section we report the views of respondents with regard to the statement that do
they feel hostile/aggressive due to the over burden or excessive work load. These results
are presented in Table 4.7a and figure 4.6. We find that pre-merger 27 respondents
strongly agreed with the statement that they feel hostile/aggressive due to the over
burden or excessive work load, however post merger only 2 respondents strongly agreed
with this statement. Also, we find that pre-merger 49 respondents agreed with the above
statement but post-merger only 17 respondents agree with this statement. These results
imply that there is a drop in perception of employees regarding being hostile/aggressive
due to the over burden or excessive work load post-merger. We also do independent
sample t-test to test this claim, the results of which are presented in Table 4.7b. We find
significant t-value, implying that there is a significant difference in respondents
perception of being hostile/aggressive due to the over burden or excessive work load pre
and post-merger.

Table 4.7a: Do you feel Hostile/aggressive due to the over burden or excessive
work load?

Pre-Merger Post-merger

Strongly Agree 27 21.6 Strongly Agree 2 1.6

Agree 49 39.2 Agree 17 13.6

Neutral 31 24.8 Neutral 19 15.2

Disagree 14 11.2 Disagree 51 40.8

Strongly Disagree 4 3.2 Strongly Disagree 2 1.6

73
Figure 4.6: Frequency of do you feel Hostile/aggressive due to the over burden or excessive
work load?

60 60

50 50

40 40

30 30

20 20

10 10

0 0
Strongly Agree Agree Neutral Disagree Strongly Disagree Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.7b: Independent t- test on do you feel Hostile/aggressive due to the over burden or
excessive work load?

t-value
Mean Std. Deviation
(p-value)

Pre-merger 3.6480 1.04152 11.066

.000
Post-merger 2.1840 1.05022

The respondents’ views on the statement “Do you feel Enthusiastic at your work place”
are presented in Table 4.8a and figure 4.7. We find that post-merger there is an increase
in respondents who strongly agree with this statement. Similarly, post-merger there is a
huge rise in respondents on the agree side for this statement. These results imply that
post-merger employees have felt more enthusiastic to go to work place. Further, we tend
to test this claim be using independent sample t-test, the results of which are presented in
Table 4.8b. We find significant t-value, implying that significant difference exists in
employees’ perception regarding feeling enthusiastic at workplace pre and post-merger.

74
Table 4.8a: Do you feel Enthusiastic at your work place?

Pre-Merger Post-merger

Strongly Agree 1 .8 Strongly Agree 26 20.8

Agree 14 11.2 Agree 53 42.4

Neutral 24 19.2 Neutral 20 16.0

Disagree 57 45.6 Disagree 21 16.8

Strongly Disagree 29 23.2 Strongly Disagree 5 4.0

Figure 4.7: Frequency of do you feel Enthusiastic at your work place?

60 60

50 50

40 40

30 30

20 20

10 10

0 0
Strongly Agree Agree Neutral Disagree Strongly Disagree Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.8b: Independent t- test on do you feel Enthusiastic at your work place?

t-value
Mean Std. Deviation
(p-value)

Pre-merger 2.2080 .95289 -10.549

Post-merger 3.5920 1.11512 (.000)

75
 The respondents’ views with regard to the statement that do you feel proud to be a part of
this organization is presented in Table 4.9a and figure 4.8. We find that 34 respondents
strongly agree with this statement post-merger while as only 2 respondents strongly
agree with this statement pre-merger. In a similar, vein we find that 64 respondents agree
with the above statement during post-merger and part of only 12 respondents agree with
this statement pre-merger. These results imply that employees mostly felt proud to be
their bank post-merger. We also do an independent sample t-test to verify weather
significant difference exists in the employees’ perception regarding feeling proud to be
part of organization. The results of this independent sample t-test are presented in Table
4.9b and we find significant t-value which implies that the difference is statistically
significant.

Table 4.9a: Do you feel proud to be a part of this organization?

Pre-Merger Post-merger

Strongly Agree 2 1.6 Strongly Agree 34 27.2

Agree 19 15.2 Agree 64 51.2

Neutral 21 16.8 Neutral 13 10.4

Disagree 59 47.2 Disagree 12 9.6

Strongly Disagree 24 19.2 Strongly Disagree 2 1.6

Figure 4.8: Frequency of do you feel proud to be a part of this organization?

76
70 70

60 60

50 50

40 40

30 30

20 20

10 10

0 0
Strongly Agree Agree Neutral Disagree Strongly Disagree Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.9b: Independent t- test on do you feel proud to be a part of this organization?

t-value
Mean Std. Deviation
(p-value)

Pre-merger 2.3280 1.00624 -12.915

(.000)
Post-merger 3.9280 .95187

In this section, we present respondents view regarding the statement “Are policies and
rules of your organization Irritable?”. The results of this statement are presented in Table
10a and figure 9. We find significant drop in employees’ agreement on this statement
post-merger. For instance, pre-merger 33 respondents strongly agreed with this statement
but post-merger only 4 respondents strongly agreed with this statement. Further, pre-
merger 53 respondents agreed with this statement but post-merger only 22 respondents
agree with this statement. These results imply that post-merger policies and rules of your
banks are not irritable. Further, we also do independent sample t-test to verify this claim,
the results are reported in Table 4.10b. We find significant t-value, implying that there is
significant shift in banks policies and rules pre and post-merger.

Table 4.10a: Are policies and rules of your organization Irritable?

Pre-Merger Post-merger

77
Strongly Agree 33 26.4 Strongly Agree 4 3.2

Agree 53 42.4 Agree 22 17.6

Neutral 23 18.4 Neutral 27 21.6

Disagree 15 12.0 Disagree 44 35.2

Strongly Disagree 1 .8 Strongly Disagree 28 22.4

Figure 4.9: Frequency of are policies and rules of your organization Irritable?

60 50

45
50
40

35
40
30

30 25

20
20
15

10
10
5

0 0
Strongly Agree Agree Neutral Disagree Strongly Disagree Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.10b: Independent t- test on are policies and rules of your organization Irritable?

t-value
Mean Std. Deviation
(p-value)

Pre-merger 3.8160 .98688 10.320

Post-merger 2.4400 1.11731 (.000)

78
 The respondents view on the statement “You had to be alert while doing your job, as
there was less job security” are presented in Table 4.11a and figure 10. Pre-merger 17
respondents strongly agreed with this statement however post-merger only 10
respondents strongly agreed with this statement. Also, pre-merger 76 respondents agreed
with this statement but post-merger 40 respondents agreed with this statement. These
results imply decrease in agreement of employees with this statement post-merger.
Further, the results of independent sample t-test presented in Table 4.11b reveals
significant t-value, implying significant difference in employees’ perception on this
statement pre and post-merger.

Table 4.11a: You had to be alert while doing your job, as there was less job security

Pre-Merger Post-merger

Strongly Agree 17 13.6 Strongly Agree 10 8.0

Agree 76 60.8 Agree 40 32.0

Neutral 23 18.4 Neutral 36 28.8

Disagree 9 7.2 Disagree 38 30.4

Strongly Disagree - - Strongly Disagree 1 .8

Figure 4.10: Frequency of you had to be alert while doing your job, as there was less job
security

79
80 45

70 40

35
60
30
50
25
40
20
30
15
20
10

10 5

0 0
Strongly Agree Agree Neutral Disagree Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.11b: Independent t- test on you had to be alert while doing your job, as there was
less job security

t-value
Mean Std. Deviation
(p-value)

Pre-merger 3.8080 .75878 5.850

(.000)
Post-merger 3.1600 .97881

Further, in Table 4.12a and figure 11 we present respondents views on the statement that
did leader’s behavior make them feel inspired. We find 34 respondents strongly agree
with this statement pre-merger but only 20 respondents strongly agree with this
statement post-merger. With regard to agree side 75 respondents agree with this
statement pre-merger and 72 respondents agree with this statement post-merger. Based
on these results, we conclude similar type of views of respondents’ pre and post-merger.
Further, the independent sample t-test results for this statement are presented in Table
12b. We find significant t-value, implying significant difference in employees’ views on
this statement as well.

Table 4.12a: Does your leader’s behavior make you feel Inspired?

Pre-Merger Post-merger

Strongly Agree 34 27.2 Strongly Agree 20 16.0

80
Agree 75 60.0 Agree 72 57.6

Neutral 13 10.4 Neutral 25 20.0

Disagree 3 2.4 Disagree 5 4.0

Strongly Disagree - - Strongly Disagree 3 2.4

Figure 4.11: Frequency of does your leader’s behavior make you feel Inspired?

80 80

70 70

60 60

50 50

40 40

30 30

20 20

10 10

0 0
Strongly Agree Agree Neutral Disagree Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.12b: Independent t- test on does your leader’s behavior make you feel Inspired?

t-value
Mean Std. Deviation
(p-value)

Pre-merger 4.1200 .67918 3.230

Post-merger 3.8080 .83951 (.001)

The respondents’ views on the statement “Do you feel determined towards your
individual target and organizational goal” are presented in Table 4.13a and figure 12. We
find that respondents’ views remain almost same on this statement pre and post-merger.
It can be ascertained from the numbers that pre-merger 19 respondents strongly agreed
with this statement and post-merger 8 respondents strongly agree with this statement.

81
 Further, 49 respondents agree with this statement pre-merger and 45 respondents agree
with this statement post-merger. However, as we tend to check statistical difference for
this statement using independent sample t-test, the results of which are reported in Table
4.13b, we find significant t-value. This implies that there is a significant difference in the
opinion of employees for this statement also.

Table 4.13a: Do you feel determined towards your individual target and organizational
goal?

Pre-Merger Post-merger

Strongly Agree 19 15.2 Strongly Agree 8 6.4

Agree 49 39.2 Agree 45 36.0

Neutral 25 20.0 Neutral 32 25.6

Disagree 30 24.0 Disagree 34 27.2

Strongly Disagree 2 1.6 Strongly Disagree 6 4.8

Figure 4.12: Frequency of do you feel determined towards your individual target and
organizational goal?

60 50

45
50
40

35
40
30

30 25

20
20
15

10
10
5

0 0
Strongly Agree Agree Neutral Disagree Strongly Disagree Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.13b: Independent t- test on do you feel determined towards your individual target
and organizational goal?

t-value
Mean Std. Deviation
(p-value)

82
Pre-merger 3.4240 1.06456 2.288

Post-merger 3.1200 1.03643 (.023)

In Table 4.14a and figure 13, we present respondents views on the statement “Do you
actively participate in the work place activities”. From the numbers presented in Table
4.14a and figure 13 we find that respondents tend to participate in more in work place
activities post-merger, since there is increase in agreement of employees for this
statement post-merger. Initially, 21 respondents strongly agreed with this statement
however post-merger 35 respondents strongly agreed with this statement. Also pre-
merger 62 respondents agreed with this statement while post-merger 76 respondents
agreed with this statement. We also examine this difference statistically by using
independent sample t-test, the results of which are presented in Table 4.14b. We find
significant t-value, implying significant difference exists for this statement pre and post-
merger.

Table 4.14a: Do you actively participate in the work place activities?

Pre-Merger Post-merger

Strongly Agree 21 16.8 Strongly Agree 35 28.0

Agree 62 49.6 Agree 76 60.8

Neutral 27 21.6 Neutral 9 7.2

Disagree 14 11.2 Disagree 5 4.0

Strongly Disagree 1 .8 Strongly Disagree - -

Figure 4.13: Frequency of do you actively participate in the work place activities?

83
70 80

70
60

60
50
50
40
40

30
30

20 20

10 10

0
0 Strongly Agree Agree Neutral Disagree
Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.14b: Independent t- test on do you actively participate in the work place activities?

t-value
Mean Std. Deviation
(p-value)

Pre-merger 3.7040 .90718 -4.122

Post-merger 4.1280 .70683 (.000)

Lastly, we present respondents views on the statement “were you afraid from presenting
your ideas in front of your senior” in Table 4.15a and figure 14. We find decrease in
respondents’ agreement on this statement post merger. Pre-merger 21 respondents
strongly agreed with this statement, however post-merger 18 respondents strongly agreed
with this statement. Also, pre-merger 72 respondents agree with this statement but 60
respondents agree with this statement post-merger, implying drop in agreement. We also
examine this difference statistically by using independent sample t-test, the results of
which are presented in Table 4.15b. We find significant t-value, implying significant
difference exists for this statement pre and post-merger.

Table 4.15a: Were you afraid from presenting your ideas in front of your senior?

Pre-Merger Post-merger

Strongly Agree 21 16.8 Strongly Agree 18 14.4

Agree 72 57.6 Agree 60 48

Neutral 21 16.8 Neutral 29 23.2

84
Disagree 11 8.8 Disagree 18 14.4

Strongly Disagree - - Strongly Disagree 2 1.6

Figure 4.14: Frequency of were you afraid from presenting your ideas in front of your
senior?

80 70

70 60

60
50
50
40
40
30
30

20
20

10 10

0 0
Strongly Agree Agree Neutral Disagree Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.15b: Independent t- test on were you afraid from presenting your ideas
in front of your senior?

t-value
Mean Std. Deviation
(p-value)

Pre-merger 3.8240 .81383 1.838

Post-merger 3.6240 .90397 (.067)

4.3. Hypothesis testing regarding attitude of employees’ towards organization pre

and post-merger

85
Based on the results presented in section 4.2, we find significant t-values for all the 14
statements regarding attitude of employees’ towards organization pre and post-merger.
Therefore, we conclude that there is a significant difference in attitude of employees’
towards organization during pre and post-merger. Accordingly, we accept the hypothesis
that there is significant difference in attitude of work force prior to and post merger of
PSU banks.

Table 4.16: Hypothesis testing regarding attitude of employees pre and post-
merger

Statements on attitude of employees pre and post-merger t-value

Do you feel your job is Interesting? Significant

Do you feel Distressed due to the work environment? Significant

Do you feel Excited while coming to your job? Significant

Did Supervisor behavior make you Upset? Significant

Does your job skills strongly match to your job requirement? Significant

Do you feel Hostile/aggressive due to the over burden or excessive Significant

work load?

Do you feel Enthusiastic at your work place? Significant

Do you feel proud to be a part of this organization? Significant

Are policies and rules of your organization Irritable? Significant

You had to be alert while doing your job, as there was less job security Significant

Does your leader’s behavior make you feel Inspired? Significant

Do you feel determined towards your individual target and Significant

organizational goal?

Do you actively participate in the work place activities? Significant

Were you afraid from presenting your ideas in front of your senior? Significant

86
 4.4. To examine the perception of employees towards merger

In this section, we tend to examine the perception of employees towards merger.

Specifically, we asked them to fill the questionnaire on same statements pre and post
merger in order to check if significant difference exists in employees perception pre and
post merger. We also do independent sample t-test on each statement to verify difference
in perception statistically.

In Table 4.17a and figure 4.15, we present the respondents views with regard to their
perception on work culture being pleasant pre and post merger. We find that post-merger
employees feel that work culture in their bank is more pleasant as the frequency values
of strongly agree and agree increase. For pre-merger 19 respondents strongly agree while
as for post-merger 27 respondents strongly agree. Similarly, for pre-merger 66
respondents agree while as for post-merger 84 respondents agree with job being
interesting. Further, to verify this claim statistically, we do an independent t-test, the
results of which are presented in Table 4.17b. We find that t-value is significant at 1
percent level of significance, implying that significant difference exists in perception of
employees regarding work culture being pleasant pre and post merger.

Table 4.17a: Pleasant Work culture

Pre-Merger Post-merger

Strongly Agree 19 7.6 Strongly Agree 27 10.8

Agree 66 26.4 Agree 84 33.6

Neutral 30 12 Neutral 6 2.4

Disagree 10 4 Disagree 8 3.2

Strongly Disagree - - Strongly Disagree - -

Figure 4.15: Frequency of Pleasant Work culture

87
70 90

80
60
70
50
60

40 50

30 40

30
20
20
10
10

0 0
Strongly Agree Agree Neutral Disagree Strongly Agree Agree Neutral Disagree

Table 4.17b: Independent t- test on Pleasant Work culture

t-value
Mean Std. Deviation
(p-value)

Pre-merger 4.040 .7229 -2.966

(0.003)
Post-merger 3.752 .8097

Table 4.18a and figure 16 presents the views of the respondents with regard to the
statement enhanced salary and other perks. We find that respondent’ views for this
statement did not change much for pre and post-merger times. For instance 32
respondents strongly agree with this statement pre-merger and 35 respondents strongly
agree for this statement post-merger. Similarly, 74 respondents agree with this statement
pre-merger and 76 respondents agree with this statement post-merger. These numbers
signify no major change in the perception of employees regarding enhancement of salary
and other perks pre and post-merger. We also try to verify this claim by independent t-
test, the results of which are presented in Table 4.18b. We find insignificant t-value,
implying no significant difference in the perception of employees regarding enhanced
salary and other perks pre and post-merger.

Table 4.18a: Enhanced Salary and other perks

Pre-Merger Post-merger

88
Strongly Agree 32 25.6 Strongly Agree 35 28.0

Agree 74 59.2 Agree 76 60.8

Neutral 14 11.2 Neutral 9 7.2

Disagree 4 3.2 Disagree 5 4.0

Strongly Disagree 1 .8 Strongly Disagree - -

Figure 4.16: Frequency of enhanced Salary and other perks

80 80

70 70

60 60

50 50

40 40

30 30

20 20

10 10

0 0
Strongly Agree Agree Neutral Disagree Strongly Disagree Strongly Agree Agree Neutral Disagree

Table 4.18b: Independent t- test on enhanced Salary and other perks

t-value
Mean Std. Deviation
(p-value)

Pre-merger 4.0560 .75460 -.779

Post-merger 4.1280 .70683 (.437)

We present the respondents views on the statement ensured job security in Table 4.19a
and figure 4.17. We find increase in respondents’ agreement on this statement post-

89
 merger. Specifically, we find 51 respondents agreed with this statement pre-merger,
however post-merger 92 respondents agree with this statement. These results assert that
post-merger employees of merger PSU banks feel ensured job security. We also perform
an independent sample t-test to verify this claim. The result of independent sample t-test
is presented in Table 4.19b. We find significant t-value which confirms the significant
difference in perception of employees on ensured job security pre and post-merger.

Table 4.19a: Ensured job security

Pre-Merger Post-merger

Strongly Agree 17 13.6 Strongly Agree 14 11.2

Agree 51 40.8 Agree 92 73.6

Neutral 18 14.4 Neutral 14 11.2

Disagree 27 21.6 Disagree 5 4.0

Strongly Disagree 12 9.6 Strongly Disagree

Figure 4.17: Frequency of ensured job security

90
60 100

90
50
80

70
40
60

30 50

40
20
30

20
10
10

0 0
Strongly Agree Agree Neutral Disagree Strongly Disagree Strongly Agree Agree Neutral Disagree

Table 4.19b: Independent t- test on Ensured job security

t-value
Mean Std. Deviation
(p-value)

Pre-merger 3.2720 1.22063 -5.297

Post-merger 3.9200 .61696 (.000)

In Table 4.20a and figure 4.18 we present respondents views for the statement offered
opportunity for the self–development. We find the 9 respondents strongly agree with this
statement for pre-merger and 17 respondents strongly agree for this statement post-
merger. Also, we find that 31 respondents agree with this statement for pre-merger and
71 respondents agree for this statement post-merger. These results reflect the post-
merger increase in respondents’ agreement on this statement. We also try to validate
these results by applying independent sample t-test, the results of which are presented in
Table 4.20b. We find significant t-value, implying that significant difference exists in the
employees’ perception regarding the statement offered opportunity for self-development
pre and post-merger.

Table 4.20a: Offered opportunity for self–development

91
Pre-Merger Post-merger

Strongly Agree 9 7.2 Strongly Agree 17 13.6

Agree 31 24.8 Agree 71 56.8

Neutral 18 14.4 Neutral 33 26.4

Disagree 44 35.2 Disagree 4 3.2

Strongly Disagree 23 18.4 Strongly Disagree

Figure 4.18: Frequency of offered opportunity for self–development

50 80

45
70
40
60
35
50
30

25 40

20
30
15
20
10
10
5

0 0
Strongly Agree Agree Neutral Disagree Strongly Disagree Strongly Agree Agree Neutral Disagree

Table 4.20b: Independent t- test on offered opportunity for self–development

t-value
Mean Std. Deviation
(p-value)

Pre-merger 2.6720 1.23638 -8.928

Post-merger 3.8080 .70363 (.000)

In Table 4.21a and figure 4.19 we present the perception of respondents with regard to
the statement friendly work atmosphere pre and post-merger. We find post-merger
employees are in more agreement with this statement that work atmosphere has become

92
 friendlier post-merger of Bank. We find 5 respondents strongly agree with this statement
pre-merger, however post-merger 11 respondents strongly agree with this statement.
Also, we find 21 respondents agree with this statement pre-merger and 48 respondents
agree with this statement post-merger. We also try to verify this claim by using
independent sample t-test, the results of which are presented in Table 4.21b. We find
significant t-value which implies significant difference in employees’ perception of
friendly work atmosphere pre and post-merger.

Table 4.21a: Friendly work atmosphere

Pre-Merger Post-merger

Strongly Agree 5 4.0 Strongly Agree 11 8.8

Agree 21 16.8 Agree 48 38.4

Neutral 50 40.0 Neutral 39 31.2

Disagree 41 32.8 Disagree 24 19.2

Strongly Disagree 8 6.4 Strongly Disagree 3 2.4

Figure 4.19: Frequency of friendly work atmosphere

60 60

50 50

40 40

30 30

20 20

10 10

0 0
Strongly Agree Agree Neutral Disagree Strongly Disagree Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.21b: Independent t- test on friendly work atmosphere

Mean Std. Deviation t-value

93
 (p-value)

Pre-merger 2.7920 .93581 -4.394

Post-merger 3.3200 .96386 (.000)

We report views of respondents for the statement that unbiased and transparent promotion
policies prevailed in bank pre and post-merger in Table 4.22a and figure 4.20. We find
strong agreement of the respondents for this statement post-merger. For instance, we find
that 14 respondents strongly agree with this statement for pre-merger and 16 respondents
strongly agree for this statement in post-merger, however only 36 respondents agreed with
this statement in pre-merger while as 87 respondents agreed with statement post-merger.
We also performed independent sample t-test to confirm this difference. The results of this
test are presented in Table 4.22b. We find significant t-value that confirms the significant
difference in the perception of employees regarding unbiased and transparent promotion
policies pre and post-merger.

Table 4.22a: Unbiased and transparent promotion policies

Pre-Merger Post-merger

Strongly Agree 14 11.2 Strongly Agree 16 12.8

Agree 36 28.8 Agree 87 69.6

Neutral 23 18.4 Neutral 13 10.4

Disagree 45 36.0 Disagree 9 7.2

Strongly Disagree 7 5.6 Strongly Disagree

Figure 4.20: Frequency of unbiased and transparent promotion policies

94
 50 100

45 90

40 80

35 70

30 60

25 50

20 40

15 30

10 20

5 10

0 0
Strongly Agree Agree Neutral Disagree Strongly Disagree Strongly Agree Agree Neutral Disagree

Table 4.22b: Independent t- test on unbiased and transparent promotion policies

t-value
Mean Std. Deviation
(p-value)

Pre-merger 3.0400 1.15284 -6.926

Post-merger 3.8800 .71392 (.000)

The respondents’ views with regard to the statement “encouraged participation in decision
making” are presented in Table 4.23a and figure 4.21.After the merger, we find that the
respondents strongly agreed with this statement. Only 38 respondents agreed with this
statement prior to the merger, whereas 64 respondents agreed with it after the merger.
Also, we find that 1 respondent strongly agree with this statement before the merger and
11 respondents strongly agree with it after the merger. To verify this difference, we also
used an independent sample t-test. The test's outcomes are shown in Table 4.23b.
Encouraged participation in decision making before and after the merger differed
significantly, as indicated by the significant t-value we found.

Table 4.23a: Encouraged participation in decision making

95
Pre-Merger Post-merger

Strongly Agree 1 .8 Strongly Agree 11 8.8

Agree 38 30.4 Agree 64 51.2

Neutral 47 37.6 Neutral 23 18.4

Disagree 36 28.8 Disagree 23 18.4

Strongly Disagree 3 2.4 Strongly Disagree 4 3.2

Figure 4.21: Frequency of encouraged participation in decision making

50 70

45
60
40

35 50

30
40
25

20 30

15
20
10

5 10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree 0
Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.23b: Independent t- test on encouraged participation in decision making

t-value
Mean Std. Deviation
(p-value)

Pre-merger 2.9840 .85179 -3.892

Post-merger 3.4400 .99515 .000

In Table 4.24a and Figure 4.22, we present the opinions of respondents regarding the
claim that adequate Resources to perform the job in banks both before and after the
merger. After the merger, we find that the respondents strongly agreed with this
statement. Only 43 respondents agreed with this statement prior to the merger, whereas

96
 58 respondents agreed with it after the merger. Also, we find that 11 respondents
strongly agree with this statement before the merger and 20 respondents strongly agree
with it after the merger. To verify this difference, we also used an independent sample t-
test. The test's outcomes are shown in Table 4.24b. Employee perceptions of availability
of adequate resources to perform the job before and after the merger differed
significantly, as indicated by the significant t-value we found.

Table 4.24a: Adequate Resources to perform the job

Pre-Merger Post-merger

Strongly Agree 11 8.8 Strongly Agree 20 16.0

Agree 43 34.4 Agree 58 46.4

Neutral 41 32.8 Neutral 22 17.6

Disagree 28 22.4 Disagree 22 17.6

Strongly Disagree 2 1.6 Strongly Disagree 3 2.4

Figure 4.22: Frequency of adequate resources to perform the job

50 70

45
60
40

35 50

30 40
25
30
20

15 20

10
10
5

0 0
Strongly Agree Agree Neutral Disagree Strongly Disagree Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.24b: Independent t- test on adequate resources to perform the job

97
 t-value
Mean Std. Deviation
(p-value)

Pre-merger 3.2640 .96004 -2.344

(.020)
Post-merger 3.5600 1.03488

4.5. Hypothesis testing regarding perception of employees’ towards organization

pre and post-merger

Based on the results presented in section 4.4, we find significant t-values for 7 statements
and non-significant t-value for one statement regarding perception of employees’
towards organization pre and post-merger. Therefore, we conclude that there is a
significant difference in perception of employees’ towards merger. Accordingly, we
accept the hypothesis that there is significant difference in perception of work force prior
to and post merger of PSU banks.

Table 4.25: Hypothesis testing regarding perception of employees pre and post-merger

Statements on perception of employees pre and post-merger t-value

Pleasant Work culture Significant

Enhanced Salary and other perks Non-Significant

Ensured job security Significant

Offered opportunity for self–development Significant

Friendly work atmosphere Significant

Unbiased and transparent promotion policies Significant

Encouraged participation in decision making Significant

Adequate resources to perform the job Significant

4.6. Demographic profile of customers

98
The customers’ demographic profile is shown in Table 4.26. We find that Male
respondents make up 55.33 percent of the sample (n = 83), while female respondents
make up 44.67 percent (n = 67). In terms of occupation, we find that 30.6 percent of
respondents (n=46) are students, 44.6 percent of the respondents (n=67) are employees, 8
percent (n=12) are self-employed and lastly 16 .8 percent (n=25) are housewife. In terms
of age, we found that 30 percent of the customers (n=45) belong to age group less than
20, 22.66 percent (n=34) belong to age group 20-30, 27.34 percent (n=41) belong to age
group 30-40 and lastly 20 percent (n=30) belong to age group above 40. Lastly, with
regard to qualification, we find that 30 percent of respondents (n=45) have qualification
up to secondary level, 36.68 percent (n=55) have qualification upto graduation, 16.66
percent (n=25) have post-graduation as qualification and lastly 16.66 percent (n=25)
have qualification above post-graduation.

Table 4.26: Demographic profile of customers

Frequency Percentage

Gender Male 83 55.33

Female 67 44.67

Occupation Student 46 30.6

Employee 67 44.6

Self-employed 12 8.0

Housewife 25 16.8

Age Group (In Less than 20 45 30

years)
20-30 34 22.66

30-40 41 27.34

Above 40 30 20

Qualification Up to secondary 45 30

99
 Graduation 55 36.68

Post-graduation 25 16.66

Above Post-graduation 25 16.66

4.7: Overall satisfaction level of consumers with Bank post-merger.

In this section, we present the customers views with regard to their level of satisfaction
with the services of bank post-merger. In Table 4.27 and figure 4.23, we present
customers views with regard to the statement that they are satisfied and happy with the
services of bank post-merger. We find majority of the customers agree (n=73; 48.7
percent) with this statement. Also, we find that 22 respondents strongly agree with this
statement, which implies majority of the customers are on the agreement side to this
statement. This leads to the conclusion that overall customers are satisfied with the
services of the bank post-merger.

Table 4.27: In general I am satisfied and happy with Bank’s services post-merger

Frequency Percent

Strongly Agree 22 14.7

Agree 73 48.7

Neutral 23 15.3

Disagree 29 19.3

Strongly Disagree 3 2.0

Figure 4.23: Frequency of in general I am satisfied and happy with Bank’s services
post-merger

100
 80

70

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

The customers’ views with regard to the statement that “I have preferred using services
of this Bank more than other service providers of the industry” are presented in Table
4.28 and figure 4.24. We find mixed views of respondents for this statement. Firstly,
majority of the respondents (n=58; 38.7 percent) disagree with this statement which
implies that customers are preferring services of the other banks as well. Also, we find
that 28 percent (n=42) respondents agree with this statement implying that some
consumers are using the services of one bank only as they are not preferring the services
of other banks.

Table 4.28: I have preferred using services of this Bank more than other service
providers of the industry

Frequency Percent

Strongly Agree 7 4.7

Agree 42 28.0

Neutral 33 22.0

Disagree 58 38.7

Strongly Disagree 10 6.7

Figure 4.24: Frequency of I have preferred using services of this Bank more than
other service providers of the industry

101
 70

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

In Table 4.29 and figure 4.25 we present customers views with regard to the statement
that bank takes customers feedback very seriously. We find customers have strong
agreement with this statement. For instance, 28 percent (n=42) strongly agree with this
statement and 47.3 percent (n=71) agree with this statement. This implies that post-
merger banks are taking customers’ feedback seriously and it is reflecting in the
customers’ perception.

Table 4.29: My Bank takes customer feedback very seriously

Frequency Percent

Strongly Agree 42 28.0

Agree 71 47.3

Neutral 19 12.7

Disagree 17 11.3

Strongly Disagree 1 .7

Figure 4.25: Frequency of my Bank takes customer feedback very seriously

102
 80

70

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

Customers' opinions regarding the claim that the bank provides effective guarantee for
service failures are shown in Table 4.30 and Figure 4.26. Customers strongly agree with
this assertion, according to our results. For example, 39.3 percent (n=59) agree with this
statement, while 8 percent (n=12) strongly agree with this statement. This suggests that
post-merger banks are reducing service failures and are providing effective guarantee to
their customers regarding any failure in their service.

Table 4.30: My Bank provides effective guarantee for service failures

Frequency Percent

Strongly Agree 12 8.0

Agree 59 39.3

Neutral 37 24.7

Disagree 36 24.0

Strongly Disagree 6 4.0

Figure 4.26: Frequency of my Bank provides effective guarantee for service

failures

103
 70

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

In Table 4.31 and figure 4.27 we present respondents views with regard to the statement
that bank provides guidance for building and maintaining long lasting customer
relationships. With this statement also customers show high level of agreement. We find
that 43.3 percent of customers (n=65) agree with this statement and 10.7 percent (n=16)
of the respondents strongly agree with this statement. This implies that post-merger
building and maintaining long lasting customer relationships have been the core part of
banks.

Table 4.31: My bank provides guidance for building and maintaining long
lasting customer relationships.

Frequency Percent

Strongly Agree 16 10.7

Agree 65 43.3

Neutral 28 18.7

Disagree 37 24.7

Strongly Disagree 4 2.7

Figure 4.27: Frequency of my bank provides guidance for building and

maintaining long lasting customer relationships.

104
 70

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.32 and figure 4.28 show the opinions of the customers on the statement that "
My bank delivers consistent customer service across all the customer touch points and
bank renders to the availability of new products." We discover that respondents' opinions
on this statement are mixed. First of all, the majority of respondents (n=61; 40.7%)
disagree with this statement, suggesting that banks are not delivering consistent customer
service across all the customer touch points and bank are not able to make available new
products. Additionally, we discover that 28.7% (n=43) of respondents agree with this
statement, suggesting that some banks deliver consistent customer service and new
products.

Table 4.32: My bank delivers consistent customer service across all the
customer touch points and bank renders to the availability of new products

Frequency Percent

Strongly Agree 18 12.0

Agree 43 28.7

Neutral 25 16.7

Disagree 61 40.7

Strongly Disagree 3 2.0

105
 Figure 4.28: Frequency of my bank delivers consistent customer service across all
the customer touch points and bank renders to the availability of new products

70

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.33 and figure 4.29 show the opinions of the respondents on the statement that "
The personnel of the bank are sincere, helpful, kind and prompt in response." We
discover that respondents' opinions on this statement are mixed. First of all, the majority
of respondents (n=56; 37.3%) agree with this statement, while as 28% (n=42) of
respondents disagree with this statement, suggesting that all the banks do not personnel
that are sincere, helpful, kind and prompt in response. Therefore, banks differ in their
personnel ability.

Table 4.33: The personnel of the bank are sincere, helpful, kind and prompt in
response

Frequency Percent

Strongly Agree 13 8.7

Agree 56 37.3

Neutral 32 21.3

Disagree 42 28.0

Strongly Disagree 7 4.7

106
 Figure 4.29: Frequency of the personnel of the bank are sincere, helpful, kind and
prompt in response

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.34 and figure 4.30 presents the opinion of the customers for the statement that
"The bank has acceptable interest rates and improved online banking facilities post
merger." We discover that respondents' opinions on this statement are mixed. First of all,
the majority of respondents (n=50; 33.3%) agree with this statement but we also find that
31.3.% (n=47) of respondents disagree with this statement, suggesting that some banks
have not been able to improve online banking post-merger.

Table 4.34: The bank has acceptable interest rates and improved online banking
facilities post merger

Frequency Percent

Strongly Agree 11 7.3

Agree 50 33.3

Neutral 37 24.7

107
 Disagree 47 31.3

Strongly Disagree 5 3.3

Figure 4.30: Frequency of the bank has acceptable interest rates and improved
online banking facilities post merger

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

The respondents’ views with regard to the statement that “The personnel of the bank uses
an easily understandable language while rendering the service” are presented in Table
4.35 and Figure 4.31. Here also we find mixed response of respondents. Firstly, we find
that majority of the respondents (n=49; 32.7 percent) of the respondents agree with this
statement. Approximately equal number of respondents (n-46; 30.7 percent) of the
respondents disagree with this statement. Further, we also find that 24.7 percent (n=37)
respondents have neutral opinion for this statement. These results imply that post merger
banks differ in their personnel ability to use understandable language while rendering
services.

Table 4.35: The personnel of the bank uses an easily understandable language
while rendering the service.
Frequency Percent
Strongly Agree 6 4.0
Agree 49 32.7

108
 Neutral 37 24.7
Disagree 46 30.7
Strongly Disagree 12 8.0

Figure 4.31: Frequency of the personnel of the bank uses an easily understandable
language while rendering the service.

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.36 and Figure 4.32 show the respondents' opinions regarding the statement that
"Information provided by the bank is trustworthy and bank does quick redressal of
customer grievances. "Respondents' responses are also mixed in this case. First, we
discover that the majority of respondents (n=52; 34.7%) agree with this assertion.
Further, 28.7 percent of respondents (n=43) had a neutral opinion regarding this
statement and also 24.7 percent of respondents (n=37) disagree with this statement.
These findings suggest that post-merger banks' differ in their ability to provide
information and quick redressal of customer grievances.

Table 4.36: Information provided by the bank is trustworthy and bank does
quick redressal of customer grievances

Frequency Percent

Strongly Agree 7 4.7

Agree 52 34.7

109
 Neutral 43 28.7

Disagree 37 24.7

Strongly Disagree 11 7.3

Figure 4.32: Frequency of information provided by the bank is trustworthy and

bank does quick redressal of customer grievances

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

In Table 4.37 and figure 4.33 we present respondents views on the statement that the
bank has well designed enquiry counter ensuring quick and proper reply to customer
question(s). We find that majority of respondents (n=80; 53.3 percent) have a neutral
opinion on this statement. This implies that customers are not sure whether bank has well
designed enquiry counter ensuring quick and proper reply to customer questions. Also,
27.3 percent (n=41) of the respondents disagree with this statement.

Table 4.37: The bank has well designed enquiry counter ensuring quick and proper
reply to customer question(s).

Frequency Percent

Strongly Agree 1 .7

Agree 21 14.0

Neutral 80 53.3

110
 Disagree 41 27.3

Strongly Disagree 7 4.7

Figure 4.33: Frequency of the bank has well designed enquiry counter ensuring
quick and proper reply to customer question(s).

90

80

70

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

The opinions of respondents regarding the statement that bank is equipped with modern
facilities and renders modern services to their customer are shown in Table 4.38 and
Figure 4.34. On this statement, we see that the majority of respondents (n=79; 52.7%)
have neutral opinion. This suggests that clients are unsure if the bank is equipped with
modern facilities and renders modern services to their customer. Furthermore, 31.3
percent (n=47) of those surveyed don't agree with this assertion.

Table 4.38: The bank is equipped with modern facilities and renders modern
services to their customer

Frequency Percent

Strongly Agree - -

Agree 17 11.3

Neutral 79 52.7

111
 Disagree 47 31.3

Strongly Disagree 7 4.7

Figure 4.34: Frequency of the bank is equipped with modern facilities and renders
modern services to their customer

90

80

70

60

50

40

30

20

10

0
Agree Neutral Disagree Strongly Disagree

The opinions of the respondents are displayed in Table 4.39 and Figure 4.35 under the
heading " More numbers of Branches and ATM after merger has helped in improving
customer service in post-merger phase."In this instance, respondents' answers are mixed.
First, we find that majority of respondents (n=64; 42.7%) have neutral opinion on this
statement. Additionally, 34 percent of respondents (n=51) disagreed with this statement,
while 14 percent of respondents (n=21) agree with this statement. These results imply
that post-merger banks vary in their capacity to establish more branches and ATMs that
would improve customer service.

Table 4.39: More numbers of Branches and ATM after merger has helped in
improving customer service in post-merger phase.

Frequency Percent

Strongly Agree 2 1.3

Agree 21 14.0

112
 Neutral 64 42.7

Disagree 51 34.0

Strongly Disagree 12 8.0

Figure 4.35: Frequency of more numbers of Branches and ATM after merger has
helped in improving customer service in post-merger phase.

70

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

4.8: Loyalty of consumers towards Bank post-merger.

In this section, we tend to present the views of respondents regarding their loyalty with
the bank post merger. Firstly, in Table 4.40 and figure 4.36, we present consumers views
on the statement that they would say positive things about bank to other people. We find
mixed views of respondents for this statement, for instance we find that 33.3 percent of
respondents (n=50) disagree with this statement and we find that 32 percent of
respondents (n=48) have remained neutral for this statement and lastly we find that 25.3
percent of the respondents (n=38) also agree with this statement. These results imply that
customers differ in saying positive things about the bank.

Table 4.40: I say positive things about Bank to other people

Frequency Percent

Strongly Agree 9 6.0

Agree 38 25.3

113
 Neutral 48 32.0

Disagree 50 33.3

Strongly Disagree 5 3.3

Figure 4.36: Frequency of I say positive things about Bank to other people

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

The views of respondents with regard to the statement that “I intend to continue with
Bank for further needs” are presented in Table 4.41 and figure 4.37. We find respondents
share mixed views for this statement as well. We find that majority of the respondents
(n=51; 34 percent) have remained neutral on this statement and 30 percent of the
respondent (n=45) have disagreed with this statement. Contrarily, 28.7 percent of the
respondents (n=43) have agreed with this statement. Therefore, it can be contended that
customers’ present mixed loyalty in terms of continuing with the current bank for further
needs.

Table 4.41: I intend to continue with Bank for further needs

Frequency Percent

Strongly Agree 8 5.3

Agree 43 28.7

114
 Neutral 51 34.0

Disagree 45 30.0

Strongly Disagree 3 2.0

Figure 4.37: Frequency of I intend to continue with Bank for further needs

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.42 and figure 4.38 show the respondents' opinions on the statement, "I promote
services of Bank to family and friends." We discover that respondents' opinions on this
statement are also divided. Thirty six percent of respondents (n=54) disagreed with this
statement, while 24.7 percent of the respondents (n=37) were neutral about it. On the
other hand, 23.3% of the respondents (n=35) agreed with this statement. As a result, it
may be argued that consumers exhibit varying degrees of loyalty when it comes
promoting services of their current bank to family and friends.

Table 4.42: I promote services of Bank to family and friends

Frequency Percent

Strongly Agree 10 6.7

Agree 35 23.3

Neutral 37 24.7

115
 Disagree 54 36.0

Strongly Disagree 14 9.3

Figure 4.38: Frequency of I promote services of Bank to family and friends

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

We present respondents views on the statement “I seldom consider switching to other

Bank service providers” in Table 4.43 and figure 4.39. We discover that respondents'
opinions on this statement are also divided. Thirty percent of respondents (n=45)
remained neutral on this statement. On the other hand, 47.3% of the respondents (n=71)
agree with this statement. Also, we find that 14.7 percent of the respondents (n=22)
disagree with the above statement. As a result, it may be argued that consumers exhibit
varying degrees of loyalty when it comes to sticking with their existing bank.

Table 4.43: I seldom consider switching to other Bank service providers

Frequency Percent

Strongly Agree 10 6.7

Agree 71 47.3

116
 Neutral 45 30.0

Disagree 22 14.7

Strongly Disagree 2 1.3

Figure 4.39: Frequency of I seldom consider switching to other Bank service

providers

80

70

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.44 and figure 4.40 show the respondents' opinions on the statement, "I doubt that
I would switch to other Bank service providers" We discover that 36.7 percent of the
respondents (n=55) agree with this statement and 29.3 percent of respondents' (n=44)
have remained neutral on this statement and lastly we find that 22.7 percent of the
respondents (n=34) disagree with this statement. These results imply that opinions of
respondents on this statement are also divided. As a result, it may be argued that
consumers might switch to other banks for services.

Table 4.44: I doubt that I would switch to other Bank service providers

Frequency Percent

Strongly Agree 15 10.0

Agree 55 36.7

117
 Neutral 44 29.3

Disagree 34 22.7

Strongly Disagree 2 1.3

Figure 4.40: Frequency of I doubt that I would switch to other Bank service
providers

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.45 and figure 4.41 show the respondents' opinions on the statement, "This Bank
is simply the best to be associated with." We discover that respondents' opinions on this
statement are also divided. Firstly, 37.3 percent of the respondents (n=56) agree with this
statement and 28.7 percent of the respondents (n=43) remain neutral on this statement.
We also find that 24.7 percent of the respondents (n=37) disagree with the current
statement. From these results it can be concluded that consumers exhibit varying degrees
of loyalty when it comes to sticking with their existing bank for simply it is best.

Table 4.45: This Bank is simply the best to be associated with

Frequency Percent

Strongly Agree 12 8.0

Agree 56 37.3

118
 Neutral 43 28.7

Disagree 37 24.7

Strongly Disagree 2 1.3

Figure 4.41: Frequency of this Bank is simply the best to be associated with

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.46 and figure 4.42 present the respondents' opinions on the statement, "I believe
that this Bank is a good organization". We discover that respondents' opinions on this
statement are also divided. Fare neutral on this statement and 28 percent of the
respondents (n=42) disagree with this statement. Lastly, we find that 24.7 percent of the
respondents (n=37) agree with this statement. As a result, it may be argued that
consumers exhibit varying degrees of loyalty when it comes to believing the existing
bank is a good organization.

Table 4.46: I believe that this Bank is a good organization

Frequency Percent

Strongly Agree 8 5.3

Agree 37 24.7

119
 Neutral 59 39.3

Disagree 42 28.0

Strongly Disagree 4 2.7

Figure 4.42: Frequency of I believe that this Bank is a good organization

70

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.47 and figure 4.43 show the respondents' opinions on the statement, "I consider
this Bank as my primary service provider." Like other statement on loyalty we discover
that respondents' opinions on this statement are also divided. Firstly, 36.7 percent of the
respondents (n=55) disagree with this statement and 48 percent of the respondents
(n=72) remain neutral on this statement. Lastly, we find that 12.7 percent of the
respondents (n=19) agree with this statement. Based on these results, it may be argued
that consumers exhibit varying degrees of loyalty when it comes to considering existing
bank as primary service provider.

Table 4.47: I consider this Bank as my primary service provider

Frequency Percent

Strongly Agree 1 .7

120
 Agree 19 12.7

Neutral 72 48.0

Disagree 55 36.7

Strongly Disagree 3 2.0

Figure 4.43: Frequency of I consider this Bank as my primary service provider

80

70

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.48 and figure 4.44 show the respondents' opinions on the statement, "This Bank
is my first choice when I need financial services" We discover that respondents' opinions
on this statement are also divided. Around 45.3 percent of respondents (n=68) are neutral
on this statement and 28 percent of respondents (n=42) disagree with this statement.
Also, we find that 20 percent of respondents (n=30) agree with the above statement.
These mixed findings suggest that consumers exhibit varying degrees of loyalty when it
comes to choosing existing bank as first choice for meeting their need of financial
services.

Table 4.48: This Bank is my first choice when I need financial services

Frequency Percent

Strongly Agree 4 2.7

121
 Agree 30 20.0

Neutral 68 45.3

Disagree 42 28.0

Strongly Disagree 6 4.0

Figure 4.44: Frequency of this Bank is my first choice when I need financial
services

80

70

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

Table 4.49 and figure 4.45 show the respondents' opinions on the statement, "I will use
other products/services offered by the bank in the future". The respondents’ views on this
statement also remain mixed as we found previously for other loyalty statements. We
find that 46 percent of the respondents (n=69) remain neutral on this statement. Also, we
find that 27.3 percent of the respondents (n=41) disagree with the above-statement and
we find that 20.7 percent of the respondents (n=31) agree with the above statement, thus
making it a mixed evidence. As a result, it may be argued that consumers exhibit varying
degrees of loyalty when it comes to using products of other banks for future
requirements.

Table 4.49: I will use other products/services offered by the bank in the future.

122
 Frequency Percent

Strongly Agree 6 4.0

Agree 31 20.7

Neutral 69 46.0

Disagree 41 27.3

Strongly Disagree 3 2.0

Figure 4.45: Frequency of I will use other products/services offered by the bank in
the future.

80

70

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

The respondents' views on the statement " Whenever there are problems, they are quickly
addressed by my bank " are displayed in Table 4.50 and figure 4.46. As we have
discovered for other loyalty claims, respondents' opinions on this one are likewise still
divided. On this statement, we discover that 47.3 percent of the respondents (n=71)
remain neutral and 34.7 percent of the respondents (n=54) disagree with the above
statement. Additionally, we discover that 12 percent of respondents (n=41) disagree with
the aforementioned assertion, while 20.7 percent of respondents (n=18) agree, indicating
that the evidence is mixed. Because of this, one may claim that customers show different
levels of loyalty maybe because problems are not quickly addressed by the banks.

123
Table 4.50: Whenever there are problems, they are quickly addressed by my bank

Frequency Percent

Strongly Agree 1 .7

Agree 18 12.0

Neutral 71 47.3

Disagree 52 34.7

Strongly Disagree 8 5.3

Figure 4.46: Frequency of Whenever there are problems, they are quickly addressed
by my bank

80

70

60

50

40

30

20

10

0
Strongly Agree Agree Neutral Disagree Strongly Disagree

4.9: Impact of merger on customer satisfaction

To determine how merger affects customer satisfaction (CS), a regression analysis was
performed. Table 4.51(a,b and c) shows the regression findings. The regression models
are fit, as shown by Table 4.51b, where the F-value is statistically significant at a
significance level of 1 percent. Additionally, we see that in Table 4.51a Durbin-Watson
statistic is between 1.75 and 2.25, suggesting that autocorrelation is not a problem in
these models. Autocorrelation is absent when Durbin-Watson statistics fall between 1.75
and 2.25. Furthermore, CS is the dependent variable in Table 4.51c, while merger is the
independent variable. We discover that the coefficient on the merge variable (0.181) is

124
 positive and significant at the five percent significance level, suggesting that merger has
positive impact on customer satisfaction. These results confirm our hypothesis that is a
significant effect of merger on customer satisfaction post-merger.

Table 4.51a: Model Summaryb

R Adjusted R Std. Error of

Model R Durbin-Watson
Square Square the Estimate

1 .181a .033 .026 .73997 1.901

a. Predictors: (Constant), MERGER

b. Dependent Variable: CS

Table 4.51b:ANOVAa

Sum of Mean
Model df F Sig.
Squares Square

Regression 2.756 1 2.756 5.034 .026b

1 Residual 81.037 148 .548

Total 83.793 149

a. Dependent Variable: CS

b. Predictors: (Constant), MERGER

Table 4.51c: Coefficientsa

Unstandardized Standardized
Coefficients Coefficients
Model t Sig.
Std.
B Beta
Error

125
 (Constant) 2.129 .448 4.749 .000
1
MERGER .249 .111 .181 2.244 .026

a. Dependent Variable: CS

In figure 4.47, we present heteroscedasticity plot of impact of merger on customer

satisfaction regression model. We find no pattern in the residuals and therefore
heteroscedasticity is unlikely a problem.

Figure 4.47: Heteroscedasticity plot of impact of merger on customer satisfaction

4.10: Impact of merger on loyalty

Regression analysis was conducted in order to ascertain the impact of merger on

customer loyalty. The regression results are shown in Table 4.52 (a,b, and c). Table
4.52b demonstrates that the regression models are fit, with the F-value being statistically
significant at a significance level of 1%. Furthermore, Table 4.52a shows that the
Durbin-Watson statistic ranges from 1.75 to 2.25, indicating that autocorrelation is not an
issue in these models. When Durbin-Watson statistics are between 1.75 and 2.25,
autocorrelation is not present. Additionally, in Table 4.52c, merger is the independent
variable and loyalty is the dependent variable. We find that the merge variable's

126
coefficient (0.419) is positive and significant at the five percent significance level,
indicating that customer is positively impacted by merger. These results confirm our
hypothesis that is a significant effect of merger on customer loyalty post-merger.

Table 4.52a: Model Summaryb

Adjusted R Std. Error of

Model R R Square Durbin-Watson
Square the Estimate

1 .419a .175 .170 .66966 1.757

a. Predictors: (Constant), MERGER

b. Dependent Variable: LOYALTY

Table 4.52b:ANOVAa

Sum of Mean
Model df F Sig.
Squares Square

Regression 14.122 1 14.122 31.492 .000b

1 Residual 66.369 148 .448

Total 80.492 149

a. Dependent Variable: LOYALTY

b. Predictors: (Constant), MERGER

Table 4.52c: Coefficientsa

Unstandardized Standardized
Coefficients Coefficients
Model t Sig.
Std.
B Beta
Error

127
 (Constant) .758 .406 1.869 .064
1
MERGER .564 .100 .419 5.612 .000

a. Dependent Variable: LOYALTY

In figure 4.48, we present heteroscedasticity plot of impact of merger on customer

loyalty regression model. We find no pattern in the residuals and therefore
heteroscedasticity is unlikely a problem.

Figure 4.48: Heteroscedasticity plot of impact of merger on customer loyalty

4.11: Analysis of pre and post-merger financial standing of merged PSU banks
using CAMELS approach

128
In this section, we try to analyze the financial standing of PSU banks namely Canara
Bank, Indian Bank, Punjab National Bank and Union Bank of India. The results of such
analysis is presented in subsequent sections.

4.11.1: Canara Bank

In this section we try to analyze the pre and post financial standing of Canara Bank after
merger with Syndicate Bank. We analyze pre and post financial standing of Canara Bank
using CAMELS framework.

4.11.1.1: Capital Adequacy: The capital adequacy has been measured as the ratio of
equity to total assets. The data with regard to equity and total assets is given in Table
4.53. From the results presented in Table 4.53, we find that the capital adequacy of
Canara Bank remained almost same pre and post-merger as the ratio value did not
change much. The mean value of capital adequacy of Canara Bank pre merger was .0012
and the mean value of capital adequacy post merger is .0014 (Table 4.53). Further, to
verify this proposition, we do an independent t-test on capital adequacy ratio pre and post
merger. The results of independent sample t-test is given in Table 4.53. We find that t-
value is not significant, implying that there is no significant difference in capital
adequacy of Canara Bank pre and post merger.

Table 4.53: Pre and post-merger capital adequacy of Canara Bank

Year Equity Assets Capital Adequacy ratio

Pre-Merger

2017-2018 7332.4 6199992 0.001183

2018-2019 7532.4 6978686 0.001079

2019-2020 10302.3 7288579 0.001413

Post-Merger

2020-2021 16467.4 11598105 0.00142

2021-2022 18141.3 12281049 0.001477

2022-2023 18141.3 13457322 0.001348

129
 Independent sample t-test

Std.
Mean Deviatio t-value(p-value)
n

Pre-merger .0012 .00017 -1.801

(.146)
Post-merger .0014 .00006

4.11.1.2: Asset Quality: Asset Quality has been measured as the ratio of fixed assets to
total assets. The data with regard to fixed assets and total assets is given in Table 4.54.
From the results presented in Table 4.54, we find that the asset quality of Canara Bank
changed significantly during pre and post-merger as the asset quality ratio value shows a
significant change. The mean value of asset quality of Canara Bank pre merger
was .0123 and the mean value of asset quality post merger is .0088 (Table 4.54),
implying significant drop in ratio. From this result it can be inferred that Canara Bank
post merger has tried to remain asset light and carry less among of fixed assets. Further,
to verify this proposition, we do an independent t-test on asset quality ratio pre and post
merger. The results of independent sample t-test is given in Table 4.54. We find that t-
value is significant, implying that there is a significant difference in asset quality of
Canara Bank pre and post merger.

Table 4.54:Pre and post-merger asset quality of Canara Bank

Year Fixed Assets Total Assets Asset Quality

Pre-Merger

2017-2018 83186.4 6199992 0.013417

2018-2019 84102.3 6978686 0.012051

2019-2020 82762.8 7288579 0.011355

Post-Merger

2020-2021 112041.9 11598105 0.00966

2021-2022 113539.5 12281049 0.009245

130
 2022-2023 102306.5 13457322 0.007602

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0123 .00105 3.940

(.017)
Post-merger .0088 .00109

4.11.1.3: Management Quality:

The ratio of profit after tax and compensation to employees is provided in the Table 4.55.
Based on the figures in Table 4.55, we can conclude that Canara Bank's management
quality changed before and after the merger because the ratio value changed
significantly. Before and after the merger, Canara Bank's management quality mean
values were-.3438 and .4734, respectively (Table 4.55). These figures imply that pre
merger Canara Bank failed to generate profit however after merger Canara Bank became
profitable. We also do an independent t-test on the management quality ratio before and
after the merger in order to confirm this claim. The Table 4.55 displays the independent
sample t-test findings. We discover that the t-value is significant, suggesting that the
management quality difference is substantial in Canara Bank pre and post merger.

Table 4.55: Pre and post-merger management quality 1 of Canara Bank

Year Employee Compensation Profit After Tax Management Quality 1

Pre-Merger

2017-2018 54441.1 -42222.4 -0.77556

2018-2019 60398.1 3470.2 0.057455

2019-2020 71341.9 -22357.2 -0.31338

Post-Merger

2020-2021 126899.6 25575.8 0.201544

131
 2021-2022 127036.4 56784.1 0.446991

2022-2023 137438.3 106037.6 0.771529

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger -.3438 .41734 -2.798

(0.049)
Post-merger .4734 .28591

We also use the ratio of net interest income to profit after tax as a second measure of
management quality of Canara Bank. The data for these two variables, net interest
income and profit after tax is given in Table 4.56. From the results presented in Table
4.56, we find that the management quality in terms of generation of interest income
remained almost same pre and post-merger for Canara Bank as the ratio value did not
change much. The mean value of management quality of Canara Bank in terms of
generation of interest income pre merger was 34.114 and the mean value of post merger
is 15.7579 (Table 4.56). Further, to verify this proposition, we do an independent t-test
on management quality ratio pre and post merger. The results of independent sample t-
test is given in Table 4.56. We find that t-value is not significant, implying that there is
no significant difference in management quality in terms of interest income generation of
Canara Bank pre and post merger.

Table 4.56 : Pre and post-merger management quality 2 of Canara Bank

Year Interest Income Profit After Tax Management Quality 2

Pre-Merger

2017-2018 412520.9 -42222.4 -9.77019

2018-2019 468103.4 3470.2 134.8923

2019-2020 489349.9 -22357.2 -21.8878

Post-Merger

2020-2021 692804.7 25575.8 27.08829

132
 2021-2022 694102.5 56784.1 12.22354

2022-2023 844247.8 106037.6 7.961778

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger 34.114 87.22 .368

(.732)
Post-merger 15.7579 10.04

4.11.1.4: Earnings:

Earnings is measured as the ratio of profit after tax to assets. This is the first measure of
earnings. The data on assets and profit after tax is given in Table. From the results
presented in Table 4.57, we find that in pre merger period Canara Bank was not
profitable for 2 years however after merger Canara Bank turned out to be profitable,
therefore there is a change in earnings of Canara Bank pre and post merger. The mean
value of earnings based on return on assets of Canara Bank during pre merger period was
-.0031 and the mean value of return on assets of Canara Bank post merger is .0049
(Table 4.57). Further, we try to ascertain whether significant difference exists in earnings
of Canara Bank pre and post merger. To verify this proposition, we do an independent t-
test. The results of independent sample t-test is given in Table 4.57. We find that t-value
is significant, implying that there is a significant difference in earnings based on assets of
Canara Bank pre and post merger.

Table 4.57: Pre and post-merger earnings 1 of Canara Bank

Year Assets Profit After Tax Earnings 1

Pre-Merger

2017-2018 6199992 -42222.4 -0.00681

2018-2019 6978686 3470.2 0.000497

2019-2020 7288579 -22357.2 -0.00307

Post-Merger

133
 2020-2021 11598105 25575.8 0.002205

2021-2022 12281049 56784.1 0.004624

2022-2023 13457322 106037.6 0.00788

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger -.0031 .00365 -3.003

(.040)
Post-merger .0049 .00285

The ratio of profit after taxes to equity serves as our second indicator of earnings. The
Table 4.58 provides information on equity and earnings after taxes. There is a difference
in Canara Bank's earnings before and after the merger, as seen by the data shown in the
Table 4.58, which show that the bank was not profitable for two years prior to the merger
but became profitable after it. Prior to the merger, Canara Bank's earnings based on
return on equity were on average -2.4892, while after the merger, the average return on
equity was 3.5094 (Table 4.58). We also attempt to determine whether Canara Bank's
earnings before and after the acquisition differ significantly. To verify this proposition,
we do an independent t-test. The results of independent sample t-test is given in Table
4.58. We find that t-value is significant, implying that there is a significant difference in
earnings based on equity of Canara Bank pre and post merger.

Table 4.58: Pre and post-merger earnings 2 of Canara Bank

Year Equity Profit after Tax Earnings 2

Pre-Merger

2017-2018 7332.4 -42222.4 -5.75833

2018-2019 7532.4 3470.2 0.460703

2019-2020 10302.3 -22357.2 -2.17012

Post-Merger

2020-2021 16467.4 25575.8 1.553117

2021-2022 18141.3 56784.1 3.130101

134
 2022-2023 18141.3 106037.6 5.845094

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger -2.4892 3.1217 -2.732

(.052)
Post-merger 3.5094 2.1709

4.11.1.5: Liquidity:

To measure liquidity we adopted the ratio of cash balance to assets. The data on these
two variables is given in Table. From the figures presented in Table 4.59, we find that
liquidity of Canara Bank reduced post merger as the ratio of liquidity reduced post-
merger. This is attributed to the increase in asset base post merger. We find the mean
value of liquidity ratio of Canara Bank to be equal to .0051pre merger and equal to .0033
post-merger (Table 4.59). We also try to verify whether this difference is statistically
also proven by applying independent sample t-test. The results of this test is given in
Table 4.59. We find that t-value is significant, implying that there is a significant
difference in liquidity of Canara Bank pre and post merger.

Table 4.59: Pre and post-merger liquidity of Canara Bank

Year Assets Cash Balance Liquidity

Pre-Merger

2017-2018 6199992 26491.6 0.004273

2018-2019 6978686 32036.7 0.004591

2019-2020 7288579 45983.5 0.006309

Post-Merger

2020-2021 11598105 44003.8 0.003794

135
 2021-2022 12281049 40710.2 0.003315

2022-2023 13457322 39143.8 0.002909

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0051 .00110 2.519

Post-merger .0033 .0004 (.065)

4.11.1.6: Sensitivity

We use two ratios to measure sensitivity; the first ratio is the measured as the ratio of
interest income to total assets. The data regarding interest income and total assets is
given in Table 4.60. From the results presented in Table 4.60, we find that sensitivity in
terms of interest income of Canara Bank was higher during pre merger time when
compared to post merger time. This can be verified by the mean values of sensitivity
ratio pre and post merger. The mean value of sensitivity in terms of interest income pre
merger was equal to .0669 while the mean value of sensitivity in terms of interest
income post merger was .0597 (Table 4.60). Further, to verify this proposition, we do an
independent t-test on sensitivity ratio pre and post merger. The results of independent
sample t-test is given in Table 4.60. We find that t-value is significant, implying that
there is a significant difference in sensitivity in terms of interest income of Canara Bank
pre and post merger.

Table 4.60 : Pre and post-merger sensitivity 1 of Canara Bank

Year Assets Interest Income Sensitivity 1

Pre-Merger

2017-2018 6199992 412520.9 0.066536

2018-2019 6978686 468103.4 0.067076

136
 2019-2020 7288579 489349.9 0.067139

Post-Merger

2020-2021 11598105 692804.7 0.059734

2021-2022 12281049 694102.5 0.056518

2022-2023 13457322 844247.8 0.062735

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0669 .0003 4.019

(.016)
Post-merger .0597 .00311

The second measure of sensitivity that we use is the ratio of total reserves to assets. This
ratio measures the sensitivity of reserves pre and post merger. The data on assets and
reserves is given in Table 4.61. From the results presented in Table 4.61, we find that the
sensitivity of Canara Bank in terms of reserves remained almost same pre and post-
merger as the ratio value did not change much. It can be numerically ascertained from
the mean value of sensitivity pre merger (.00280) and the mean value of sensitivity post
merger is .00208 (Table 4.61). Further, to verify this proposition, we do an independent
t-test on sensitivity ratio pre and post merger. The results of independent sample t-test is
given in Table 4.61. We find that t-value is not significant, implying that there is no
significant difference in sensitivity in terms of reserves of Canara Bank pre and post
merger.

Table 4.61: Pre and post-merger sensitivity 2 of Canara Bank

Year Assets Reserves Sensitivity 2

Pre-Merger

2017-2018 6199992 348715.9 0.056245

2018-2019 6978686 354240 0.05076

2019-2020 7288579 382627.3 0.052497

Post-Merger

137
 2020-2021 11598105 572381.9 0.049351

2021-2022 12281049 642971.8 0.052355

2022-2023 13457322 717930.4 0.053349

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0532 .00280 .735

(.503)
Post-merger .0517 .00208

4.11.1.7: Summary of CAMELS framework for Canara Bank

Based on the results presented above following variables of CAMELS framework

remained same or changed pre and post merger

Table 4.62: Summary of CAMELS framework for Canara Bank

Variable Measurement Effect of merger

Capital Adequacy Equity to total assets Remained same

Asset Quality Fixed assets to total assets Changed

Management Quality 1 Profit after tax to Changed

compensation to employees

Management Quality 2 Net interest income to Remained same

profit after tax

Earnings 1 Profit after tax to total Changed

assets

Earnings 2 Profit after taxes to equity Changed

138
 Liquidity Cash balance to total assets Changed

Sensitivity 1 Interest income to total Changed

assets

Sensitivity 2 Total reserves to assets Remained same

4.11.2: Indian Bank

This section attempts to examine Indian Banks financial position both before and after its
merger with Allahabad Bank. Using the CAMELS framework, we examine Indian Banks
financial position both before and after merger.

4.11.2.1: Capital Adequacy:

The ratio of equity to total assets has been used to quantify capital adequacy. The
information about total assets and equity is provided in the Table 4.63. Based on the
findings in the Table 4.63, we can conclude that Indian Bank's capital adequacy was
nearly unchanged before and after the merger because the ratio value barely changed.
Before and after the merger, Indian Bank's capital adequacy mean values were.0019
and.0018, respectively (Table 4.63). We also do an independent t-test on the capital
adequacy ratio before and after the merger in order to confirm this claim. The Table 4.63
displays the independent sample t-test findings. We discover that the t-value is not
significant, suggesting that the difference in capital adequacy of Indian bank is not
substantial pre and post merger.

Table 4.63: Pre and post-merger capital adequacy of Indian Bank

Year Equity Assets Capital Adequacy

ratio

Pre-Merger

2017-2018 4803 2527158 0.001901

139
 2018-2019 4802.9 2808756 0.00171

2019-2020 6088 3100523 0.001964

Post-Merger

2020-2021 11293.7 6243766 0.001809

2021-2022 12454.4 6726452 0.001852

2022-2023 12454.4 7115261 0.00175

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0019 .00013 .668

(.541)
Post-merger .0018 .00005

4.11.2.2: Asset Quality:

The ratio of fixed assets to total assets has been used to quantify asset quality. The Table
4.64 provides information on total assets and fixed assets. Based on the findings in the
Table 4.64, we can conclude that Indian Bank's asset quality underwent a substantial
change before and after the merger, as indicated by the asset quality ratio value. Indian
Bank's asset quality mean value before the merger was .0134, and after the merger, it is
.0112 (Table 4.64), suggesting a notable decline in the ratio. This outcome suggests that
Indian Bank made an effort to maintain asset lightness and carry fewer fixed assets after
the merger. We also do an independent t-test on the asset quality ratio before and after
the merger to confirm this claim. The Table 4.64 displays the independent sample t-test
findings. We discover that the t-value is significant; suggesting that Indian Bank's asset
quality before and after the merger differed significantly.

Table 4.64: Pre and post-merger asset quality of Indian Bank

Year Fixed Assets Total Assets Asset Quality

Pre-Merger

2017-2018 34177.5 2527158 0.013524

140
 2018-2019 39606.4 2808756 0.014101

2019-2020 38949.6 3100523 0.012562

Post-Merger

2020-2021 73752.6 6243766 0.011812

2021-2022 76800.1 6726452 0.011418

2022-2023 74552.4 7115261 0.010478

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0134 .00078 3.609

(.023)
Post-merger .0112 .00069

4.11.2.3: Management Quality:

The Table 4.65 shows the ratio of earnings after taxes to employee compensation which
is used as a measure of management quality. We find that there was no substantial shift
in the ratio value of management quality pre and post merger. The management quality
mean values of Indian Bank were .3496 prior to the merger and .5873 following the
merger (Table 4.65). To verify this assertion, we also do an independent t-test on the
management quality ratio of pre and post merger. The results of the independent sample
t-test are shown in the Table 4.65. We find that the t-value is non-significant, indicating
that Indian Bank's management quality does not differ significantly pre and post merger.

Table 4.65: Pre and post-merger management quality 1 of Indian Bank

Employee
Year Profit After Tax Management Quality 1
Compensation

Pre-Merger

2017-2018 21002.5 12589.9 0.599448

141
 2018-2019 22228.7 3219.5 0.144835

2019-2020 24729.6 7533.6 0.304639

Post-Merger

2020-2021 63782.4 30046.8 0.471083

2021-2022 66957.1 39448.2 0.589156

2022-2023 75272.6 52817 0.701676

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .3496 .23062 -1.597

(.186)
Post-merger .5873 .11531

As a second indicator of Indian Bank's managerial quality, we also look at the ratio of net
interest income to profit after taxes. The Table 4.66 provides the information for these
two variables that is net interest income and profit after taxes. Based on the facts shown
in the Table 4.66, we can conclude that Indian Bank's management quality in terms of
interest income generation was essentially same before and after the merger because the
ratio value barely changed. It is worth to mention that pre merger, Indian Bank's
management quality mean was 33.8651and 10.4580, post merger (Table 4.66). Further,
to verify this proposition, we do an independent t-test on management quality ratio pre
and post merger. The results of independent sample t-test is given in Table 4.66. We find
that t-value is not significant, implying that there is no significant difference in
management quality in terms of interest income generation of Indian Bank pre and post
merger.

Table 4.66: Pre and post-merger management quality 2 of Indian Bank

Year Interest Income Profit After Tax Management Quality 2

Pre-Merger

142
 2017-2018 171136.5 12589.9 13.59316

2018-2019 191848 3219.5 59.58938

2019-2020 214049.7 7533.6 28.41267

Post-Merger

2020-2021 391057.8 30046.8 13.01496

2021-2022 388562.2 39448.2 9.849935

2022-2023 449422.2 52817 8.509044

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger 33.8651 23.477 1.719

Post-merger 10.4580 2.313 (.161)

4.11.2.4: Earnings:

The ratio of profit after taxes to assets is used to calculate earnings measure of Indian
bank. This is the first earnings metric used. The Table 4.67 provides information on
assets and profit after taxes. We find there is a difference in Indian Bank's earnings
before and after the merger, as seen by the data shown in the Table 4.67. According to
Indian Bank's return on assets, the average earnings value prior to the merger was .0029,
while the average return on assets following the merger is .0060 (Table 4.67).
Additionally, we attempt to determine whether Indian Bank's earnings differ significantly
pre and post merger. For this, we do an independent t-test. The results of independent
sample t-test is given in Table 4.67. We find that t-value is significant, implying that
there is a significant difference in earnings based on assets of Indian Bank pre and post
merger.

Table 4.67: Pre and post-merger earnings 1 of Indian Bank

143
 Year Assets Profit After Tax Earnings 1

Pre-Merger

2017-2018 2527158 12589.9 0.004982

2018-2019 2808756 3219.5 0.001146

2019-2020 3100523 7533.6 0.00243

Post-Merger

2020-2021 6243766 30046.8 0.004812

2021-2022 6726452 39448.2 0.005865

2022-2023 7115261 52817 0.007423

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0029 .000195 -2.341

(.079)
Post-merger .0060 .00131

Our second measure of earnings is the ratio of profit after taxes to equity. The data on
earnings after taxes and equity are shown in the Table 4.68. Indian Bank's earnings
before and after the merger differed, as evidenced by the statistics in the Table 4.68.
Indian Bank's average return on equity before the merger was 1.5097, and its average
return on equity following the merger was 3.3562 (Table 4.68). We additionally try to
ascertain whether there are any notable differences between Indian Bank's earnings prior
to and following the merger. To confirm this claim, we use an independent t-test. The
outcomes of the independent t-test are presented in Table 4.68.We find that t-value is
significant, implying that there is a significant difference in earnings based on equity of
Indian Bank pre and post merger.

Table 4.68: Pre and post-merger earnings 2 of Indian Bank

Year Equity Profit after Tax Earnings 2

144
 Pre-Merger

2017-2018 4803 12589.9 2.621258

2018-2019 4802.9 3219.5 0.670324

2019-2020 6088 7533.6 1.237451

Post-Merger

2020-2021 11293.7 30046.8 2.660492

2021-2022 12454.4 39448.2 3.167411

2022-2023 12454.4 52817 4.240831

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger 1.5097 1.0035 -2.484

Post-merger 3.3562 .80691 (.068)

4.11.2.5: Liquidity:

We used the cash balance to asset ratio to gauge liquidity. The Table 4.69 provides
information on these two variables. As the ratio of liquidity decreased after the merger,
we may infer from the statistics in the Table 4.69 that Indian Bank's liquidity decreased
as well. This is ascribed to the post-merger expansion of the asset base. We determine
that Indian Bank's average liquidity ratio was equal to .0030 prior to the merger and
equal to .0024 following the merger (Table 4.69). We also use the independent sample t-
test to see if this difference is statistically supported. The test's results are displayed in
the Table 4.69. We discover that the t-value is not significant; suggesting that Indian
Bank's liquidity pre and post merger did not change.

Table 4.69: Pre and post-merger liquidity of Indian Bank

Year Assets Cash Balance Liquidity

145
 Pre-Merger

2017-2018 2527158 4997 0.001977

2018-2019 2808756 10307.5 0.00367

2019-2020 3100523 10060.9 0.003245

Post-Merger

2020-2021 6243766 16582.8 0.002656

2021-2022 6726452 19624 0.002917

2022-2023 7115261 12424.8 0.001746

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0030 .00088 .846

Post-merger .0024 .00061 (.445)

4.11.2.6: Sensitivity

To gauge sensitivity of Indian Bank, we employ two ratios. The first ratio is the interest
income to total asset ratio. The Table 4.70 provides information on total assets and
interest income. Based on the findings in the Table 4.70, we can conclude that Indian
Bank's sensitivity to interest income was greater before the merger than it was after the
merger. The mean sensitivity ratio values before and after the merger serve as evidence
for this. Prior to the merger, the mean sensitivity value in terms of interest income was
.0684, and after the merger, it was .0612 (Table 4.70). We also do an independent t-test
on the sensitivity ratio before and after the merger to confirm this claim. The Table 4.70
displays the independent sample t-test findings. We discover that the t-value is
significant, suggesting that Indian Bank's interest income sensitivity before and after the
merger differs significantly.

146
 Table 4.70: Pre and post-merger sensitivity 1 of Indian Bank

Year Assets Interest Income Sensitivity 1

Pre-Merger

2017-2018 2527158 171136.5 0.067719

2018-2019 2808756 191848 0.068304

2019-2020 3100523 214049.7 0.069037

Post-Merger

2020-2021 6243766 391057.8 0.062632

2021-2022 6726452 388562.2 0.057766

2022-2023 7115261 449422.2 0.063163

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0684 .00066 4.074

(.015)
Post-merger .0612 .00297

The ratio of total reserves to assets acts as our second sensitivity metric. The sensitivity
of reserves before and after the merger is gauged by this ratio. The Table 4.71 provides
the asset and reserve statistics. Based on the findings in the Table 4.71, we can conclude
that Indian Bank's reserve sensitivity was changed pre and post merger because the ratio
value changed. The mean sensitivity value before the merger was .0692, while the mean
sensitivity value after the merger was. .0628, which can be determined quantitatively
(Table 4.71). Further, to verify this proposition, we do an independent t-test on
sensitivity ratio pre and post merger. The results of independent sample t-test is given in
Table 4.71. We find that t-value is significant, implying that there is a significant
difference in sensitivity in terms of reserves of Indian Bank pre and post merger.

Table 4.71: Pre and post-merger sensitivity 2 of Indian Bank

Year Assets Reserves Sensitivity 2

147
 Pre-Merger

2017-2018 2527158 179681.2 0.0711

2018-2019 2808756 189083.9 0.067319

2019-2020 3100523 214804.5 0.06928

Post-Merger

2020-2021 6243766 372826 0.059712

2021-2022 6726452 424633.7 0.063129

2022-2023 7115261 467273.3 0.065672

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0692 .00189 3.131

Post-merger .0628 .00299 (.035)

4.11.2.7: Summary of CAMELS framework for Indian Bank

Based on the results presented above following variables of CAMELS framework

remained same or changed pre and post merger

Table 4.72: Summary of CAMELS framework for Indian Bank

Variable Measurement Effect of merger

Capital Adequacy Equity to total assets Remained same

Asset Quality Fixed assets to total assets Changed

Management Quality 1 Profit after tax to Remained same

compensation to employees

Management Quality 2 Net interest income to Remained same

148
 profit after tax

Earnings 1 Profit after tax to total Changed

assets

Earnings 2 Profit after taxes to equity Changed

Liquidity Cash balance to total assets Remained same

Sensitivity 1 Interest income to total Changed

assets

Sensitivity 2 Total reserves to assets Changed

4.11.3. Punjab National Bank

This section looks at Punjab National Bank's financial situation before and after it
merged with the Oriental Bank of Commerce (OBC) and United Bank of India (UBI).
We analyze Punjab National Bank's financial situation prior to and after the merger using
the CAMELS framework.

4.11.3.1: Capital Adequacy:

Capital adequacy has been measured using the equity to total asset ratio. The Table 4.73
contains the data regarding total assets and equity. Since the ratio value hardly changed,
we may infer from the table's results that Punjab National Bank's capital adequacy
remained essentially constant before and after the merger. Further, Punjab National
Bank's capital adequacy mean values were .0012 and .0016 prior to and following the
merger, respectively (Table 4.73). To verify this assertion, we also do an independent t-
test on the capital adequacy ratio prior to and after the merger. The results of the
independent sample t-test are shown in the Table 4.73. We find that the t-value is not
significant, indicating that there was not a significant variation in the capital adequacy of
Punjab National banks before and after the merger.

Table 4.73: Pre and post-merger capital adequacy of Punjab National Bank

149
 Year Equity Assets Capital Adequacy ratio

Pre-Merger

2017-2018 5521.1 7668470 0.00072

2018-2019 9208.1 7754540 0.001187

2019-2020 13475.1 8310551 0.001621

Post-Merger

2020-2021 20955.4 12617680 0.001661

2021-2022 22022 13159754 0.001673

2022-2023 22022 14630806 0.001505

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0012 .00045 -1.645

(.175)
Post-merger .0016 .00009

4.11.3.2: Asset Quality:

Asset quality has been measured using the fixed assets to total assets ratio. Total assets
and fixed assets data is shown in the Table 4.74. We can infer from the Table 4.74 results
that, as the asset quality ratio values of Punjab National Bank's do not change much
before and after the merger. Prior to the merger, Punjab National Bank's asset quality
mean value was .0083; following the merger, it is now .0084 (Table 4.74), indicating a
small increase in the ratio. This result implies that following the merger, Punjab National
Bank tried to keep slightly more fixed assets. We also do an independent t-test on the
asset quality ratio before and after the merger to confirm this claim. The Table 4.74
displays the independent sample t-test findings. We discover that the t-value is not
significant; suggesting that Punjab National Bank's asset quality before and after the
merger does not differ significantly.

Table 4.74: Pre and post-merger asset quality of Punjab National Bank

150
 Year Fixed Assets Total Assets Asset Quality

Pre-Merger

2017-2018 63493.3 7668470 0.00828

2018-2019 62248.5 7754540 0.008027

2019-2020 72390.8 8310551 0.008711

Post-Merger

2020-2021 110209 12617680 0.008734

2021-2022 106736.1 13159754 0.008111

2022-2023 120510.7 14630806 0.008237

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0083 .00035 -.077

(.942)
Post-merger .0084 .00033

4.11.3.3: Management Quality:

The earnings after tax to employee compensation ratio is used to gauge management
quality. The data on these two variables for Punjab National Bank is displayed in the
Table 4.75. We discover that the ratio value of management quality before and after the
merger did significantly change. Before the merger, Punjab National Bank's management
quality mean values were -.9080, and after the merger, they were .2091 (Table 4.75). We
also perform an independent t-test on the management quality ratio before and after the
merger to confirm this claim. The Table 4.75 displays the findings of the independent
sample t-test. The significant t-value suggests that there is a significant difference in the
management quality of Punjab National Bank before and after the merger.

Table 4.75: Pre and post-merger management quality 1 of Punjab National Bank

151
 Year Employee Compensation Profit After Tax Management Quality 1

Pre-Merger

2017-2018 91688 -122828 -1.33963

2018-2019 69631.6 -99754.9 -1.43261

2019-2020 69616.8 3361.9 0.048292

Post-Merger

2020-2021 121757.4 20216.2 0.166037

2021-2022 118410.1 34569.6 0.291948

2022-2023 148100.1 25072 0.169291

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger -.9080 .829 -2.324

(.081)
Post-merger .2091 .071

We also examine the ratio of net interest income to profit after taxes as a second measure
of Punjab National Bank's managerial quality. The data for these two variables—profit
after taxes and net interest income—is shown in the Table 4.76. Since the ratio value
hardly changed, we can infer from the information in the Table 4.76 that Punjab National
Bank's management quality in terms of interest income production was virtually the
same before and after the merger. It is important to note that Punjab National Bank's
management quality mean was 50.325prior to the merger and 31.865following it (Table
4.76). We also perform an independent t-test on the management quality ratio before and
after the merger in order to confirm this claim. The Table 4.76 displays the independent
sample t-test findings. We find that t-value is not significant, implying that there is no
significant difference in management quality in terms of interest income generation of
Punjab National Bank pre and post merger.

Table 4.76: Pre and post-merger management quality 2 of Punjab National

152
 Bank

Year Interest Income Profit After Tax Management Quality 2

Pre-Merger

2017-2018 479957.6 -122828 -3.90755

2018-2019 513102.5 -99754.9 -5.14363

2019-2020 538000.3 3361.9 160.0286

Post-Merger

2020-2021 808184.1 20216.2 39.97705

2021-2022 748795.5 34569.6 21.66052

2022-2023 851441.1 25072 33.95984

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger 50.325 95.007 .335

(.755)
Post-merger 31.865 9.336

4.11.3.4: Earnings:

The first earning metric of an Indian bank is determined by dividing its assets by its
profit after taxes. Data on assets and earnings after taxes are shown in the Table 4.77.
Based on the information in the Table 4.77, we discover that Punjab National Bank's
earnings before and after the merger differed. The average earnings value before the
merger was -.0095, while the average return on assets after the merger is .0020 (Table
4.77). These results imply that prior to merger Punjab National Bank was not profitable;
however after merger the bank turned to be profitable. We also try to find out if there are
any notable differences in Punjab National Bank's earnings before and after the merger.
We use an independent t-test for this. The Table 4.77 displays the independent sample t-
test findings. The t-value is found to be significant, implying that there is a significant
difference in earnings based on assets of Punjab National Bank pre and post merger.

153
 Table 4.77: Pre and post-merger earnings 1of Punjab National Bank

Year Assets Profit After Tax Earnings 1

Pre-Merger

2017-2018 7668470 -122828 -0.01602

2018-2019 7754540 -99754.9 -0.01286

2019-2020 8310551 3361.9 0.000405

Post-Merger

2020-2021 12617680 20216.2 0.001602

2021-2022 13159754 34569.6 0.002627

2022-2023 14630806 25072 0.001714

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger -.0095 .00872 -2.275

(.085)
Post-merger .0020 .00056

The ratio of profit after taxes to equity serves as our second indicator of earnings. The
Table 4.78 displays the equity and profit after taxes data. The figures in the table show
that Punjab National Bank's earnings in terms of equity before and after the merger were
same. Before the merger, Punjab National Bank's average return on equity was -10.943,
while after the merger, it was 1.2243 (Table 4.78). We also attempt to determine whether
Punjab National Bank's earnings before and after the merger change in any significant
ways. We employ an independent t-test to validate this assertion. Table 4.78 displays the
results of the independent t-test. The t-value is not significant, which indicates that there
is a no substantial variation in the earnings based on equity of Punjab National Bank pre
and post merger.

Table 4.78: Pre and post-merger earnings 2 of Punjab National Bank

154
 Year Equity Profit after Tax Earnings 2

Pre-Merger

2017-2018 5521.1 -122828 -22.2471

2018-2019 9208.1 -99754.9 -10.8334

2019-2020 13475.1 3361.9 0.24949

Post-Merger

2020-2021 20955.4 20216.2 0.964725

2021-2022 22022 34569.6 1.569776

2022-2023 22022 25072 1.138498

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger -10.943 11.248 -1.873

Post-merger 1.2243 .31152 (.134)

4.11.3.5: Liquidity:

To measure liquidity, we employed the cash balance to asset ratio. Details on these two
variables are given in the Table 4.79. We may deduce from the table's statistics that
Punjab National Bank's liquidity declined along with the ratio of liquidity following the
merger. Prior to the merger, Punjab National Bank's average liquidity ratio was equal
to.0028; after the merger, it was equivalent to.0026 (Table 4.79). To determine whether
this difference is statistically supported, we also employ the independent sample t-test.
The Table 4.79 shows the outcomes of the test. We find that the t-value is not significant,
indicating that there was no change in Punjab National Bank's liquidity before and after
the merger.

Table 4.79: Pre and post-merger liquidity of Punjab National Bank

155
 Year Assets Cash Balance Liquidity

Pre-Merger

2017-2018 7668470 21051.7 0.002745

2018-2019 7754540 18539.3 0.002391

2019-2020 8310551 27461.7 0.003304

Post-Merger

2020-2021 12617680 34780.2 0.002756

2021-2022 13159754 34915.4 0.002653

2022-2023 14630806 37130 0.002538

Independent sample t-test

Std.
Mean t-value(p-value)
Deviation

Pre-merger .0028 .00046 .602

Post-merger .0026 .00011 (.580)

4.11.3.6: Sensitivity

We use two ratios to assess Punjab National Bank's sensitivity. The interest income to
total asset ratio is the first ratio of sensitivity. Data on Interest income and total assets are
shown in the Table 4.80. We can infer from the Table's results that Punjab National Bank
was more sensitive to interest income prior to the merger than it was following it. This is
demonstrated by the mean sensitivity ratio values before and after the merger. In terms of
interest income, the mean sensitivity value was .0645 before the merger and .0597 after it
(Table 4.80). To support this assertion, we also do an independent t-test on the sensitivity
ratio prior to and following the merger. The results of the independent sample t-test are
shown in the Table 4.80. We discover that the t-value is non-significant, suggesting that

156
Punjab National Bank's interest income sensitivity before and after the merger did not
differ significantly.

Table 4.80: Pre and post-merger sensitivity 1 of Punjab National Bank

Year Assets Interest Income Sensitivity 1

Pre-Merger

2017-2018 7668470 479957.6 0.062588

2018-2019 7754540 513102.5 0.066168

2019-2020 8310551 538000.3 0.064737

Post-Merger

2020-2021 12617680 808184.1 0.064052

2021-2022 13159754 748795.5 0.0569

2022-2023 14630806 851441.1 0.058195

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0645 .00180 1.965

(.121)
Post-merger .0597 .00381

Our second sensitivity measure is the ratio of total reserves to assets. This ratio measures
the sensitivity of reserves prior to and following the merger. The reserve and asset
information are shown in the Table 4.81. Because the ratio value remained almost same
pre and post merger, we can infer that reserve sensitivity of Punjab National Bank
remained unaltered both before and after the merger. Quantitative analysis reveals that
the mean sensitivity value prior to the merger was .0609, and following the merger, it
was .0693 (Table 4.81). We also do an independent t-test on the sensitivity ratio before
and after the merger to confirm this claim. The Table 4.81 displays the independent
sample t-test findings. We discover that the t-value is non-significant, suggesting that

157
there is a no significant difference in sensitivity in terms of reserves of Punjab National
Bank pre and post merger.

Table 4.81: Pre and post-merger sensitivity 2 of Punjab National Bank

Year Assets Reserves Sensitivity 2

Pre-Merger

2017-2018 7668470 405221.8 0.052843

2018-2019 7754540 438663.2 0.056569

2019-2020 8310551 610099.7 0.073413

Post-Merger

2020-2021 12617680 888417.7 0.070411

2021-2022 13159754 932846.9 0.070886

2022-2023 14630806 976534.6 0.066745

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0609 .01096 -1.301

(.263)
Post-merger .0693 .00227

4.11.3.7: Summary of CAMELS framework for Punjab National Bank

Based on the results presented above following variables of CAMELS framework

remained same or changed pre and post merger

Table 4.82: Summary of CAMELS framework for Punjab National Bank

Variable Measurement Effect of merger

Capital Adequacy Equity to total assets Remained same

158
 Asset Quality Fixed assets to total assets Remained same

Management Quality 1 Profit after tax to Changed

compensation to employees

Management Quality 2 Net interest income to Remained same

profit after tax

Earnings 1 Profit after tax to total Changed

assets

Earnings 2 Profit after taxes to equity Remained same

Liquidity Cash balance to total assets Remained same

Sensitivity 1 Interest income to total Remained same

assets

Sensitivity 2 Total reserves to assets Remained same

4.11.4: Union Bank of India

In this section we try to analyze the pre and post financial standing of Union Bank of
India after merger with Andhra Bank and Corporation Bank. We analyze pre and post
financial standing of Union Bank of India using CAMELS framework.

4.11.4.1: Capital Adequacy:

The equity to total asset ratio has been used to gauge capital adequacy. The information
about total assets and equity is in the Table 4.83. We may conclude from the table's data
that Union Bank of India capital adequacy tends to be same before and after the merger
because the ratio value barely changed. Additionally, before and after the merger, Union
Bank of India capital adequacy mean values were .0040 and .0057, respectively (Table
4.83). We also do an independent t-test on the capital adequacy ratio before and after the

159
merger to confirm this claim. The Table 4.83 displays the findings of the independent
sample t-test. We discover that the t-value is not significant, suggesting that Union Bank
of India capital adequacy did not vary significantly.

Table 4.83: Pre and post-merger capital adequacy of Union Bank of India

Year Equity Assets Capital Adequacy ratio

Pre-Merger

2017-2018 11685.7 4900776 0.002384

2018-2019 17630.2 4965523 0.003551

2019-2020 34228.2 5529720 0.00619

Post-Merger

2020-2021 64068.4 10749729 0.00596

2021-2022 68347.5 11907908 0.00574

2022-2023 68347.5 12843440 0.005322

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0040 .00195 -1.432

Post-merger .0057 .00032 (.226)

4.11.4.2: Asset Quality:

The ratio of fixed assets to total assets has been used to gauge asset quality. The Table
4.84 displays data on total assets and fixed assets. The results of the Table 4.84 indicate
that ratio of asset quality of Union Bank of India decreased after the merger. The asset
quality mean value of Union Bank of India was .0079 before the merger, but it is now
.0065 (Table 4.84). This outcome suggests that Union Bank of India made an effort to
reduce holding more fixed assets after the merger. To support this assertion, we also do

160
an independent t-test on the asset quality ratio prior to and following the merger. The
results of the independent sample t-test are shown in the Table 4.84. We discover that the
t-value is significant; suggesting that Union Bank of India asset quality before and after
the merger differ significantly.

Table 4.84: Pre and post-merger asset quality of Union Bank of India

Year Fixed Assets Total Assets Asset Quality

Pre-Merger

2017-2018 37998.4 4900776 0.007754

2018-2019 37187.2 4965523 0.007489

2019-2020 47091.3 5529720 0.008516

Post-Merger

2020-2021 72815.9 10749729 0.006774

2021-2022 71552 11907908 0.006009

2022-2023 88050.7 12843440 0.006856

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0079 .00053 3.356

(.028)
Post-merger .0065 .00047

4.11.4.3: Management Quality:

The ratio of employee compensation to earnings after taxes is used to evaluate the
quality of management. The Table 4.85 shows Union Bank of India data on these two
factors. We find that there was a considerable shift in the management quality ratio value
before and after the merger. The management quality mean values of Union Bank of
India were -1.132 prior to the merger and.5037 following it (Table 4.85). To support this
assertion, we also conduct an independent t-test on the management quality ratio prior to
and following the merger. The results of the independent sample t-test are shown in the

161
Table 4.85. The significant t-value indicates that Union Bank of India management
quality before and after the merger differed significantly.

Table 4.85: Pre and post-merger management quality 1 of Union Bank of India

Year Employee Compensation Profit After Tax Management Quality 1

Pre-Merger

2017-2018 32753 -52473.7 -1.6021

2018-2019 31559.1 -29474.5 -0.93395

2019-2020 33632 -28977.8 -0.86161

Post-Merger

2020-2021 92836.1 29059.7 0.313022

2021-2022 101146.1 52321 0.517281

2022-2023 123897.1 84332.8 0.680668

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger -1.132 .408 -6.328

(.003)
Post-merger .5037 .184

As a second indicator of managerial quality of Union Bank of India, we also look at the
ratio of net interest income to profit after taxes. The Table 4.86 provides the information
for these two variables: net interest income and profit after taxes. Based on the facts
shown in the table, we can conclude that Union Bank of India management quality in
terms of interest income production differed before and after the merger because the ratio
value barely changed. Before and after the merger, Union Bank of India management
quality score was -10.215 and 15.408, respectively, in terms of interest income
production (Table 4.86). We also perform an independent t-test on the management
quality ratio before and after the merger in order to confirm this claim. The results of
independent sample t-test is given in Table 4.86. We find that t-value is significant,

162
implying that there is a significant difference in management quality in terms of interest
income generation of Union Bank of India pre and post merger.

Table 4.86: Pre and post-merger management quality 2 of Union Bank of India

Year Interest Income Profit After Tax Management Quality 2

Pre-Merger

2017-2018 327479.9 -52473.7 -6.24084

2018-2019 340666.5 -29474.5 -11.558

2019-2020 372311.2 -28977.8 -12.8482

Post-Merger

2020-2021 687673.3 29059.7 23.66416

2021-2022 679439.6 52321 12.98598

2022-2023 807433.4 84332.8 9.57437

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger -10.215 3.502 -5.451

(.006)
Post-merger 15.408 7.350

4.11.4.4: Earnings:

The ratio of profit after taxes to assets is used to calculate earnings. This is the first
earnings metric. The Table 4.87 provides information on assets and profit after taxes.
There is a difference in Union Bank of India earnings before and after the merger, as
seen by the data shown in the table, which show that the bank was not profitable prior to
the merger but became profitable after it. According to Union Bank of India return on
assets, the average earnings value prior to the merger was -.0073, while the average
return on assets following the merger is .0046 (Table 4.87). We also attempt to determine
whether Union Bank of India earnings before and after the merger differ significantly.
We perform an independent t-test in order to confirm this claim. The Table 4.87 displays

163
the independent sample t-test findings. We discover that the t-value is significant,
suggesting that Union Bank of India earnings based on assets before and after the merger
change significantly.

Table 4.87: Pre and post-merger earnings 1 of Union Bank of India

Year Assets Profit After Tax Earnings 1

Pre-Merger

2017-2018 4900776 -52473.7 -0.01071

2018-2019 4965523 -29474.5 -0.00594

2019-2020 5529720 -28977.8 -0.00524

Post-Merger

2020-2021 10749729 29059.7 0.002703

2021-2022 11907908 52321 0.004394

2022-2023 12843440 84332.8 0.006566

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger -.0073 .00298 -5.780

(.004)
Post-merger .0046 .00194

As a second indicator of Union Bank of India managerial quality, we also look at the
ratio of net interest income to profit after taxes. The Table 4.88 displays the statistics for
these two variables: net interest income and profit after taxes. We may conclude from the
data in the table that Union Bank of India management quality in terms of interest
income output changed before and after the merger because the ratio value increased
after merger. It is noteworthy that the management quality mean of Union Bank of India
was -2.336 pre-merger and after the merger it was .8177 (Table 4.88). We also perform
an independent t-test on the management quality ratio before and after the merger in
order to confirm this claim. The Table 4.88 displays the independent sample t-test

164
findings. We find that t-value is significant, implying that there is a significant difference
in management quality in terms of interest income generation of Union Bank of India pre
and post merger.

Table 4.88: Pre and post-merger earnings 2 of Union Bank of India

year Equity Profit after Tax Earnings 2

Pre-Merger

2017-2018 11685.7 -52473.7 -4.49042

2018-2019 17630.2 -29474.5 -1.67182

2019-2020 34228.2 -28977.8 -0.84661

Post-Merger

2020-2021 64068.4 29059.7 0.453573

2021-2022 68347.5 52321 0.765514

2022-2023 68347.5 84332.8 1.233883

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger -2.336 1.190 -2.801

Post-merger .8177 .392 (.049)

4.11.4.5: Liquidity:

We used the cash balance to asset ratio to gauge liquidity. The Table 4.89 provides
information on these two variables. The ratio of liquidity slightly increased after the
merger. We determine that Canara Bank's average liquidity ratio was equal to .0029 prior
to the merger and equal to .0030 following the merger (Table 4.89). We also use the
independent sample t-test to see if this difference is statistically supported. The test's
results are displayed in the Table 4.89. We discover that the t-value is not significant,
suggesting that Union Bank of India liquidity before and after merger remained same.

165
 Table 4.89: Pre and post-merger liquidity of Union Bank of India

Year Assets Cash Balance Liquidity

Pre-Merger

2017-2018 4900776 12903.4 0.002633

2018-2019 4965523 12470 0.002511

2019-2020 5529720 20043.6 0.003625

Post-Merger

2020-2021 10749729 37817.9 0.003518

2021-2022 11907908 37819.4 0.003176

2022-2023 12843440 28388.2 0.00221

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0029 .00061 -.085

Post-merger .0030 .00068 (.936)

4.11.4.6: Sensitivity

To gauge sensitivity, we employ two ratios. The first ratio is the interest income to total
asset ratio. The table provides information on total assets and interest income. Based on
the findings in the Table 4.90, we can conclude that Union Bank of India sensitivity to
interest income was greater before the merger than it was after. The mean sensitivity
ratio values before and after the merger serve as evidence for this. Prior to the merger,
the mean sensitivity value in terms of interest income was .0676, and after the merger, it
was .0613 (Table 4.90). Further, to verify this proposition, we do an independent t-test
on sensitivity ratio pre and post merger. The results of independent sample t-test is given

166
in Table 4.90. We find that t-value is significant, implying that there is a significant
difference in sensitivity in terms of interest income of Union Bank of India pre and post
merger.

Table 4.90: Pre and post-merger sensitivity 1of Union Bank of India

Year Assets Interest Income Sensitivity 1

Pre-Merger

2017-2018 4900776 327479.9 0.066822

2018-2019 4965523 340666.5 0.068606

2019-2020 5529720 372311.2 0.067329

Post-Merger

2020-2021 10749729 687673.3 0.063971

2021-2022 11907908 679439.6 0.057058

2022-2023 12843440 807433.4 0.062867

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0676 .00092 2.846

(.047)
Post-merger .0613 .00371

The ratio of total reserves to assets acts as our second sensitivity metric. The sensitivity
of reserves before and after the merger is gauged by this ratio. The Table 4.91 provides
the asset and reserve statistics. Based on the findings in the Table 4.91, we can conclude
that Union Bank of India reserve sensitivity was essentially same before and after the
merger because the ratio value barely changed. The mean sensitivity value before the
merger was .0512, while the mean sensitivity value after the merger was .0544, which
can be determined quantitatively (Table 4.91). We also do an independent t-test on the
sensitivity ratio before and after the merger to confirm this claim. The Table 4.91
displays the independent sample t-test findings. We discover that the t-value is not

167
significant, implying that there is no significant difference in sensitivity in terms of
reserves of Union Bank of India pre and post merger.

Table 4.91: Pre and post-merger sensitivity 2 of Union Bank of India

Year Assets Reserves Sensitivity 2

Pre-Merger

2017-2018 4900776 239282.1 0.048825

2018-2019 4965523 247240 0.049791

2019-2020 5529720 303628.4 0.054908

Post-Merger

2020-2021 10749729 580699.1 0.05402

2021-2022 11907908 637413.9 0.053529

2022-2023 12843440 714994.7 0.05567

Independent sample t-test

Mean Std. Deviation t-value(p-value)

Pre-merger .0512 .00327 -1.620

(.181)
Post-merger .0544 .00112

4.11.4.7: Summary of CAMELS framework for Union Bank of India

Based on the results presented above following variables of CAMELS framework

remained same or changed pre and post merger

Table 4.92: Summary of CAMELS framework for Union Bank of India

Variable Measurement Effect of merger

Capital Adequacy Equity to total assets Remained same

168
 Asset Quality Fixed assets to total assets Changed

Management Quality 1 Profit after tax to Changed

compensation to employees

Management Quality 2 Net interest income to Changed

profit after tax

Earnings 1 Profit after tax to total Changed

assets

Earnings 2 Profit after taxes to equity Changed

Liquidity Cash balance to total assets Remained same

Sensitivity 1 Interest income to total Changed

assets

Sensitivity 2 Total reserves to assets Remained same

4.11.4.8: Comparison of CAMELS framework for all selected banks

Based on the results presented above the comparison of CAMELS framework for the
selected banks are as follows:

Comparative study of CAMELS Framework for Merged PSU Banks

Variable Measurement Effect of merger

Indian PNB UBI Canara

bank

Capital Equity to total Remained Remained Remained Remained

Adequacy assets same same same same

Asset Quality Fixed assets to Changed Remained Changed Changed

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 total assets same

Management PAT to Changed Changed Changed Changed

Quality 1 compensation
to employees

Management Net interest Remained Remained Changed Remained

Quality 2 income to same same same
profit after tax

Earnings 1 Profit after tax Changed Changed Changed Changed

to total assets

Earnings 2 Profit after Changed Remained Changed Changed

taxes to equity same

Liquidity Cash balance to Changed Remained Remained Changed

total assets same same

Sensitivity 1 Interest income Changed Remained Changed Changed

to total assets same

Sensitivity 2 Total reserves Remained Remained Remained Remained

to assets same same same same

From the findings above it is evidently clear that all the selected banks have seen
significant difference in financial standing after the merger hence the null hypothesis is
rejected.

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 Chapter 5

Summary, Findings Conclusion & Recommendation

The first objective of this study has been to examine the attitude and perception of
employees towards merger. Specifically, we tend to examine the difference in attitude
and perception of employees towards their bank pre and post merger. Firstly, with regard
to attitude of employees towards merger we find the following:

 We find difference exists in attitude of employees regarding interestingness of

job pre and post merger as post-merger employees feel that their job is more
interesting.

 We find that post-merger distress of the work environment has decreased thereby
difference exists in employees’ perception of distress caused by work
environment pre and post merger.

 Employees are more excited for coming to the job post-merger implying
significant difference in their excitement towards job pre and post merger.

 We find that post-merger employees feel that their supervisors’ behavior has been
much pleasant and thereby they suggest that difference in supervisors’ behavior
pre and post merger.

 Post-merger PSU banks have been able to match the employees’ job skills with
the job requirements.

 Results suggest that post-merger there is a drop in employees perception of being

hostile/aggressive due to the over burden or excessive work load.

 Post-merger employees have felt more enthusiastic to go to work place because

workplace has been more enthusiastic post-merger.

 Results imply that employees mostly felt proud to be their bank post-merger.

 We find that post-merger policies and rules of your banks are not irritable and
thereby a significant shift in banks policies and rules post-merger is witnessed.

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  The employees felt more job-security post-merger

 We find that post-merger leader’s behavior made them feel inspired.

 The employees feel much more determined towards individual target and
organizational goals post-merger

 We also find that post-merger employees have been actively participating in the
work place activities.

 Lastly, we find that employees are not afraid from presenting their ideas in front
of your senior in PSU banks post-merger.

Based on the above-mentioned results, we conclude that there is a significant difference

in attitude of employees’ towards organization during pre and post-merger. With regard
to perception of employees towards merger we find the following:

 We find that post-merger employees feel that work culture in their bank is more
pleasant

 The respondents’ views with regard to enhanced salary and other perks remain
same for pre and post-merger times.

 Results assert that post-merger employees of merger PSU banks feel ensured job
security.

 Post-merger employees feel that they have been offered more opportunities for
self-development as compared to pre-merger.

 We find employees are in more agreement that work atmosphere has become
friendlier post-merger of Bank.

 We find that more unbiased and transparent promotion policies prevailed in bank
post-merger

 After the merger, we find that the employees feel that they were highly
encouraged for participation in decision making.

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  We also find that resources to perform the job in banks have increased after the
merger.

Based on the above-mentioned results we conclude that there is a significant difference

in perception of employees’ towards merger.

5.1. Recommendations based on results of examining the attitude and perception of

employees toward merger

Based on the results of objective 1 following recommendations are made:

 The results show that mergers have a range of effects on businesses, including
management impacts that may have an impact on worker satisfaction. This entails
listening intently to people's worries throughout merger, and it's crucial to
maintain motivation at its highest level thereafter.In addition to reviewing their
rules to ensure that employees are happy working for the company, PSU banks
must put a lot of effort into developing tactics to inspire staff to perform better.
Increased job satisfaction among employees is a result of better pay and perks. A
contented and driven employee has faith in the company and develops a feeling
of community with it, which results in both the individual and the company
performing well. Therefore, it is recommended that HR managers and upper
management of PSU banks organize initiatives that directly support workers in
carrying out their responsibilities effectively and cultivating a positive outlook.
Individual team members' attachment to the company is crucial for fostering and
sustaining a positive attitude inside the group, which in turn helps them feel like
they belong.

 A number of factors, such as job insecurity and shortage, contribute to the

pressure from mergers. This confirm that the more trustworthy and open
communication is needed regarding for enhancing employees' perceptions of the
real merger world so that they feel more secure in difficult situations.
Additionally, communication is crucial to reduce stress, create a shared vision,
smooth change, and provide a sense of importance. Also, it reduces antagonistic
power and reliance on rumors and gossip.

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  Further, PSU banks can encourage employees to show interest in a new merger
firm. This reduces possible barriers and maintains a positive attitude throughout
the merger transition. Additionally, it will help maintain employee satisfaction
and increase their level of authoritative dedication.

 Employees should be trained to adapt to changes, develop new skills and talents
to suit evolving business needs, and enhance performance to satisfy job
preferences. Due to the considerable turnover that occurs after mergers and
acquisitions, administrators of PSU banks require training and development
activities in order to handle the challenges of merger. It is necessary to extend
development and make use of advancements. It is important to promote the
business formats and frameworks. Employees from the two companies that are
anticipated to participate in the merger and acquisition must get to know one
another's companies in order to develop cooperation.

The second objective of this study has been to examine the perspective of customers and
people sentiment in the context of merger. Specifically, we tend to examine the
satisfaction of consumers and loyalty of consumer towards their bank post merger.
Firstly, with regard to satisfaction of consumers we find the following:

 We find customers are satisfied and happy with the services of bank post-
merger.

 We find mixed views of customers that post-merger they would prefer using
services of this Bank more than other service providers of the industry.

 We find that post merger banks have been taking customers’ feedback seriously
and it is reflecting in the customers’ perception.

 Customers' have mixed opinions that post-merger bank provides effective

guarantee for service failures post-merger

 We find post-merger PSU banks provide high level of guidance for building and
maintaining long lasting customer relationships.

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  We find mixed opinion of consumers that post-merger bank delivers consistent
customer service across all the customer touch points and bank renders to the
availability of new products

 We find mixed opinion of consumers that post-merger personnel of the bank are
sincere, helpful, kind and prompt in response

 We find mixed opinion of consumers that post-merger bank has acceptable

interest rates and improved online banking facilities post merger.

 We find mixed opinion of consumers that post-merger personnel of the bank uses
an easily understandable language while rendering the service

 Consumers’ opinion is also mixed on the statement that post-merger information

provided by the bank is trustworthy and bank does quick redressal of customer
grievances.

 We find neutral opinion of consumers on the statement that the bank has well
designed enquiry counter ensuring quick and proper reply to customer
question(s).

 The consumers opinion on the statement that bank is equipped with modern
facilities and renders modern services to their customer remains neutral

 We find mixed opinion of consumers that post-merger more numbers of branches

and ATM after merger has helped in improving customer service.

Based on the above-mentioned results, we conclude that consumers have mixed opinion
with regard to their satisfaction with bank post-merger. With regard to post-merger
loyalty of consumers towards bank we find the following:

 We find mixed views of consumers for the statement that post-merger they will
say positive things about the bank.

 We find that customers’ present mixed loyalty in terms of continuing with the
current bank for further needs post-merger

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  We find that consumers exhibit varying degrees of loyalty when it comes
promoting services of their current bank to family and friends post-merger

 We find that post-merger consumers exhibit varying degrees of loyalty when it

comes to sticking with their existing bank.

 Given the varying degrees of loyalty we find that post-merger consumers might
switch to other banks for services.

 We discover that post-merger consumers exhibit varying degrees of loyalty when

it comes to sticking with their existing bank.

 We discover that post-merger consumers exhibit varying degrees of loyalty when

it comes to believing the existing bank is a good organization.

 Like other statement on loyalty we discover that consumers exhibit varying

degrees of loyalty when it comes to considering existing bank as primary service
provider.

 The mixed findings suggest that consumers exhibit varying degrees of loyalty
when it comes to choosing existing bank as first choice for meeting their need of
financial services.

 We find that post-merger consumers exhibit varying degrees of loyalty when it

comes to using products of other banks for future requirements.

Based on the above-mentioned results, we conclude that consumer’s present mixed

loyalty with the bank post-merger. Further, we also tried to determine the impact of
merger on consumers’ satisfaction and loyalty and we find that merger has a
significant positive impact on customer satisfaction as well as loyalty.

5.2. Recommendations based on results of examining customer satisfaction and

loyalty

Based on the results of objective 2 following recommendations are made:

174
  Knowing how people feel about banking mergers is important because today's
market has become consumer-centric and customer satisfaction is of the utmost
importance, especially in a service industry like the banking sector. Therefore,
banks need to take utmost care of improving customer satisfaction and loyalty of
their existing employees.

 The study emphasizes the need for more stakeholder engagement by stressing
how crucial it is to take into account the opinions of both customers and
employees during merger procedures. PSU bank officials should push banks to
implement procedures that promote open communication, resolve issues, and
actively include staff members and clients in merger and acquisition decision-
making.

 Information and communication about M&A are thought to help with customer
retention and complaint resolution. The PSU banks need to focus on better
communication and information sharing with their consumers. Banks can use the
proper channel to address the information asymmetry.

The third objective of this study was to use CAMELS, score to analyze pre and post-
merger financial standing of merged PSU banks. The findings are as follows:

 Canara Bank:

o Capital adequacy remained unchanged indicating its ability to absorb

potential losses and maintain stability remains unchanged.

o Asset quality significantly dropped implying post merger bank has tried to
remain light and carry less fixed assets.

o Management quality (profit to compensation) suggest increase in

generation of profit per rupee spent on employee post merger

o Earnings changed implying pre merger period Canara Bank was not profitable
however after merger Canara Bank turned out to be profitable

o Liquidity changed and reduced after merger thus indicates that a company
has reduced cash and cash equivalents to cover its short-term liabilities

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 o Sensitivity in terms of interest income of Canara Bank was higher during pre
merger time when compared to post merger time.

 Indian Bank:

o Capital adequacy, management quality (both measures), and liquidity

remained unchanged.

o Asset quality, earnings, and sensitivity changed post-merger.

 Punjab National Bank:

o Capital adequacy, asset quality, management quality (net interest income),

liquidity, and sensitivity remained unchanged.

o Management quality (profit to compensation) and earnings (profit ratios)

changed.

 Union Bank of India:

o Capital adequacy, liquidity, and total reserves to assets remained

unchanged.

o Asset quality, management quality, earnings, and sensitivity changed.

 Across all banks, capital adequacy remained unchanged post-merger.

 Earnings showed variability, with profitability ratios changing for most banks.

 Asset quality changed for all banks except Punjab National Bank.

 Management quality and sensitivity indicators varied across banks, reflecting

different post-merger impacts.

In conclusion, the analysis of the CAMELS framework for Canara Bank, Indian Bank,
Punjab National Bank, and Union Bank of India reflects a mixed impact of the mergers
on their financial performance. Across all four banks, capital adequacy remained
unchanged post-merger, indicating that the mergers did not significantly affect their

176
ability to absorb financial shocks. Asset quality showed improvement for most banks
except Punjab National Bank, suggesting enhanced management of non-performing
assets. Management quality presented varied results, with some banks experiencing a
positive shift in efficiency, while others-maintained stability. Earnings metrics, including
profit-to-assets and profit-to-equity ratios, changed for most banks, highlighting
increased profitability challenges post-merger. Liquidity largely remained stable,
reflecting consistent short-term financial health. Sensitivity to market risk showed mixed
outcomes, with some banks improving their sensitivity to interest rate changes while
others-maintained pre-merger levels. Overall, the CAMELS analysis indicates that while
the mergers have led to some improvements in asset quality and profitability, challenges
in management efficiency and earnings stability remain areas for strategic focus.

We also tend to analyze pre and post-merger financial standing of merged PSU banks
using CAMELS approach. We present the following based on this analysis:

 We found that capital adequacy of Canara Bank remained almost same pre and
post-merger.

 We find that the asset quality of Canara Bank changed significantly during pre
and post-merger as the asset quality ratio value shows a significant change.

 We find that Canara Bank's management quality in terms of compensation to

employees changed before and after the merger.

 We find that the management quality in terms of generation of interest income

remained almost same pre and post-merger for Canara Bank.

 We find that in pre merger period Canara Bank was not profitable for 2 years
however after merger Canara Bank turned out to be profitable.

 We find that liquidity of Canara Bank reduced post merger as the ratio of
liquidity reduced post-merger.

 we find that sensitivity in terms of interest income of Canara Bank was higher
during pre merger time when compared to post merger time.

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 we find that the sensitivity of Canara Bank in terms of reserves remained almost
same pre and post-merger as the ratio value did not change much.

 We find that Indian Bank's capital adequacy was nearly unchanged before and
after the merger because the ratio value barely changed.

 We find that Indian Bank's asset quality underwent a substantial change before
and after the merger.

 We find that there was no substantial shift in the ratio value of management
quality pre and post merger for Indian Bank.

 We find that Indian Bank's management quality in terms of interest income

generation was essentially same before and after the merger.

 We find that there is a significant difference in earnings based on assets of Indian

Bank pre and post merger.

 We find that there is a significant difference in earnings in earnings based on

equity of Indian Bank pre and post merger.

 We discover that Indian Bank's liquidity pre and post merger did not change.

 We discover that Indian Bank's interest income sensitivity before and after the
merger differs significantly.

 We find that there is a significant difference in sensitivity in terms of reserves of

Indian Bank pre and post merger.

 We find that there was not a significant variation in the capital adequacy of
Punjab National banks before and after the merger.

 We discover that Punjab National Bank's asset quality before and after the merger
does not differ significantly.

 We discover that Punjab National Bank's management quality before and after
the merger did significantly change.

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 We find no significant difference in management quality in terms of interest
income generation of Punjab National Bank pre and post merger.

 Results imply that prior to merger Punjab National Bank was not profitable;
however after merger the bank turned to be profitable.

 We find no change in Punjab National Bank's liquidity before and after the
merger.

 We find that Punjab National Bank was more sensitive to interest income prior to
the merger than it was following it.

 We find that Union Bank of India capital adequacy tends to be same before and
after the merger because the ratio value barely changed.

 We find that Union Bank of India asset quality before and after the merger differ
significantly.

 We find that there was a considerable shift in the management quality ratio of
Union Bank of India before and after the merger.

 We find significant difference in management quality in terms of interest income

generation of Union Bank of India pre and post merger.

 There is a difference in Union Bank of India earnings before and after the merger,
which show that the bank was not profitable prior to the merger but became
profitable after it.

 We discover that the Union Bank of India liquidity before and after merger
remained same.

 We find that there is a significant difference in sensitivity in terms of interest

income of Union Bank of India pre and post merger.

 We discover that there is no significant difference in sensitivity in terms of

reserves of Union Bank of India pre and post merger.

5.3. Recommendations based on results of CAMELS ANALYSIS

179
  Banks can address their shortcomings and enhance their financial performance by
analyzing and comparing their financial performance before and after the merger.
It will incentivize banks to identify and maintain the characteristics that are
financially sound and to concentrate on those that negatively impact their overall
performance.

 The results of this study might provide a starting point for additional research on
the effectiveness of merger as a tactic to improve bank performance.

 The banking regulators will also gain from this since they may use the
performance of chosen banks before and after mergers to determine what rules
are needed in the future to guide mergers in the banking industry. The direction
of future policy on mergers in the banking industry can also be determined by
banking regulators by looking at the performance of banks before and after the
merger.

5.4 Future Scope

Mergers and acquisitions (M&A) impact to the performance of public sector banks
constitutes an area for future research especially from employees and customers
perspectives. Various studies of financial performance and operational efficiencies after
merger demonstrate varying results and suggest that the analysis of the effect of merger
based on specific factors is on demand. As illustrated by Ahmed et al.’s evaluation, in
some cases, these banks see a drop in their net profit margins; in other cases they do not
have major differences; these results may possibly be contingent on particular context
based factors. Also, more current examples in different countries like Zambia indicate
that loan to deposit ratio has changed significantly after an M&A, which implies that a
financial restructuring changes the operations notably after a M&A.

Based on these findings, the future empirical research of M&A outcomes could also
consider using both qualitative and quantitative methods such as interviews or focus
groups. The combination of the quantitative and qualitative method would provide a
better clarification on whether the compliance of employee and customer perceptions
matches or diverges with the financial performance metrics. In terms of cultural
integration post M&A, the existing literature establishes the fact that clashes between

180
corporate cultures can have adverse effects on employee morale and performance
thereby necessitating research in this field. As such, employee satisfaction and perceived
job security surveys, together with the financial data, will allow a multifaceted view of
M&A effects on bank institutions.

In addition, the success of merged banks in the long run depends largely on customer
experience and confidence. Research suggests customer loyalty and bank performance
are greatly affected by the perception of the American public, especially when there are
significant changes such as mergers within the organization. The impact of M&A on
service delivery of banks can be understood by assessing the effect of M&A on customer
service quality in terms of customer satisfaction and trust, which will allow banks to
optimize service delivery. Therefore, the integration process should be adapted in a way
to sustain and strengthen positive customer engagements, and services cohere with the
newly unified brand image.

Extending the research should also include M&E impacts on banking sector at regional
and cross national settings. Research on merges and acquisitions can be carried out by
examining various outcomes of similar merges and acquisitions in different economic
and regulatory environments, hence analyzing best practices and strategies of best
merger and acquisitions. By applying this comparative analysis, we are better able to
determine what factors, such as regulatory frameworks, market competition and
economic stability can affect M&A to achieve higher effectiveness in enhancing
financial performance and institutional viability.

Finally, there is enough room for development of predictive models to forecast the
results of bank mergers in terms of indicators of preceding performance and
organizational states. They can also aid decision makers for understanding the risks and
benefits beforehand of M&A, and finally making decision to plan the strategies in the
financial sector more informed. The point of this line of research, therefore, leads to a
need for dialogue with a broader range of stakeholders, namely policymakers, regulatory
bodies and banks, in order to develop a supportive framework that encourages
sustainable M&A practices.

5.5 Limitation of the Study

181
Implication obtained from the study of the mergers and acquisitions impact on public
sector bank performance through the optical eye of employee and customer perception
has some limitations which needs to be stated. One such limitation is the difficulty in
pooling banking environments across regions as they are heterogeneous and can
introduce significant bias in the results. Due to the variety of factors such as regulatory
frameworks, market dynamics and economic condition in different countries, the
banking sector is influenced by myriad factors.

Second, data access and availability is another limitation. The financial performance data
is most often public and the effects of mergers and acquisitions may not be fully captured
by publicly available data. Quantitative measures are useful in showing financial changes
such as profitability and liquidity but they don’t take employee sentiments or customer
perceptions into account. The research conducted by Ahmed et al. also reflected this
concern, showing a decrease in net profit margins without tying it with the other
qualitative aspects of employee satisfaction and customer trust. This causes studies to
take on a partial view that might neglect the qualitative factors that have a great effect on
overall performance assessments. Self reported data is used, introducing biases as
employees may under report dissatisfaction and customers often are not able to express
their experiences during periods of organization change.

Another limitation is that assessing perceptions is a subjective matter. It can be argued

that employee morale, customer satisfaction and sentiment about the merger are
subjective and based on other factors beyond the merger context including organizational
culture, job security and the market dynamics. This is especially true in the case of public
sector banks where it is always a challenge to bring about a change in the entrenched
cultures and practices. According to Hamdi’s research, cultural mismatches after a
merger decrease employee performance, and its impact on employee morale and
productivity may not be straightforwardly quantifiable. As such qualitative
methodologies like interviews or open-ended surveys can be enriching but also bring
elements of subjectivity and analysis.

The effects of mergers are further limited by temporal factors. The study is sometimes of
cross-sectional nature, and seldom is the idea of true before and after changes observed.
Its effects can be captured only by longitudinal studies, when delayed effects of mergers

182
and acquisitions on the performance indicators will be considered. Such research
suggests that there may be differences such as immediate financial impacts post-merger
could be different than what is observed long after, for instance when the culture is being
integrated, and operational efficiencies would manifest themselves over a longer term.
Therefore, data collection thereafter will consist of a time lag that will allow for an
incomplete picture of the effects of merger, and a mix of short term and long-term
metrics should be used in future research.

Last, the scope of the issue might weaken the narrowness of the studies. Mergers and
acquisitions may have colliding effects on many different politically sensitive
dimensions such as corporate governance, regulatory compliance, and market
competitiveness. These factors exert such a far‐reaching effect, that they can obscure
easy conclusions regarding the effects stemming entirely from mergers. By way of
example, research has found that observed trends in bank performance may be due to
factors other than mergers, such as regulatory changes or broader economic shifts that
potentially confound the impacts of the merger process itself. All these variables are
intertwined, and so can complicate causal analyses and preclude firm causation
conclusions regarding the efficacy and outcomes of M&A in banking industry.” These
limitations can only be addressed by carefully designed empirical studies that isolate
influences and account for the various effects of mergers as well as those of subsequent
integration processes.

183
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Questionnaire
This questionnaire is designed to assess employees' perceptions and attitudes before and
after a merger. It aims to gather insights into how employees view organizational
changes, workplace culture, job security, leadership effectiveness, communication, and
overall job satisfaction during the transition. The survey will help identify any positive or
negative shifts in employee morale, engagement, and trust in management. Additionally,
it seeks to explore challenges faced by employees and the impact of the merger on their
roles, professional growth, and organizational commitment. The responses will be
analyzed to understand key trends and provide recommendations for improving
employee experience in post-merger integration.

Demographic Profile

Respondents Information: (Tick one box for each statement)

Gender Male [ ] Female [ ]

25-35 [ ] 35-45 [ ]
Age
Above 45 [ ]

1-5 [ ] 6 -10 [ ]
Experience
11-15 [ ] Above 15 [ ]

Marital Status Married [ ] Unmarried [ ]

UG [ ] PG [ ]
Qualification
Other [ ]

Working Place Indian Bank [ ] Punjab National Bank[ ]

Canara Bank [ ] Union Bank of India [ ]

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Kindly indicate your level of agreement for the following Statements based on your opinion pre-
merger. For the below mentioned statements circling 1 means you strongly disagree with the
statement and circling 5 means you strongly agree. Or you may circle any number in the middle that
shows how strong your opinion is

STATEMENTS S.D. (1) D.(2) N.(3) A.(4) S.A.(5)

Did you feel your job is Interesting? 1 2 3 4 5

Did you feel Distressed due to the work environment? 1 2 3 4 5

Did you feel Excited while coming to your job? 1 2 3 4 5

Did Supervisor behavior make you Upset? 1 2 3 4 5

Did your job skills strongly match to your job 1 2 3 4 5

requirement

Did you feel Hostile/aggressive due to the over burden 1 2 3 4 5

or excessive work load

Did you feel Enthusiastic at your work place 1 2 3 4 5

Did you feel proud to be a part of this organization 1 2 3 4 5

Were policies and rules of your organization Irritable 1 2 3 4 5

You had to be alert while doing your job, as there was 1 2 3 4 5

less job security

Did your leader’s behavior make you feel Inspired 1 2 3 4 5

Did you feel determined towards your individual target 1 2 3 4 5

and organizational goal

Did you actively participated in the work place 1 2 3 4 5

activities

Were you afraid from presenting your ideas in front of 1 2 3 4 5

your senior

194
Kindly indicate your level of agreement for the following Statements based on your opinion
post-merger. For the below mentioned statements circling 1 means you strongly disagree with the
statement and circling 5 means you strongly agree. Or you may circle any number in the middle
that shows how strong your opinion is

Do you feel your job is Interesting? 1 2 3 4 5

Do you feel Distressed due to the work environment? 1 2 3 4 5

Do you feel Excited while coming to your job? 1 2 3 4 5

Does supervisor’s behavior make you Upset? 1 2 3 4 5

Does your job skills strongly match to your job 1 2 3 4 5

requirement

Do you feel Hostile/aggressive due to the over burden or 1 2 3 4 5

excessive work load

Do you feel Enthusiastic at your work place 1 2 3 4 5

Do you feel Proud to be a part of this organization 1 2 3 4 5

Are policies and rules of this organization Irritable 1 2 3 4 5

Do you have to be alert while doing your job, as there is 1 2 3 4 5

less job security

Does your leader behavior make you feel Inspired 1 2 3 4 5

Do you feel Determined towards your individual target 1 2 3 4 5

and organizational goal

Do you Actively participate in the work place activities 1 2 3 4 5

Are you Afraid from presenting your ideas in front of 1 2 3 4 5

your Senior

I feel strong sense of belonging to my organization. 1 2 3 4 5

195
Kindly indicate your perception for the following Statements based on your opinion pre-
merger. For the below mentioned statements circling 1 means you strongly disagree with the
statement and circling 5 means you strongly agree. Or you may circle any number in the
middle that shows how strong your opinion is

Pre-Merger our organization

Had Pleasant Work culture 1 2 3 4 5

Enhanced Salary and other perks 1 2 3 4 5

Ensured job security 1 2 3 4 5

Offered opportunity for the self–development 1 2 3 4 5

Had friendly work atmosphere 1 2 3 4 5

Had unbiased and transparent promotion policies 1 2 3 4 5

Encouraged participation in decision making 1 2 3 4 5

Had adequate Resources to perform the job 1 2 3 4 5

196
Kindly indicate your perception for the following Statements based on your opinion post-
merger.

For the below mentioned statements circling 1 means you strongly disagree with the
statement and circling 5 means you strongly agree. Or you may circle any number in the
middle that shows how strong your opinion is

Post-Merger our organization

Had Pleasant Work culture 1 2 3 4 5

Enhanced Salary and other perks 1 2 3 4 5

Ensured job security 1 2 3 4 5

Offered opportunity for the self–development 1 2 3 4 5

Had friendly work atmosphere 1 2 3 4 5

Had unbiased and transparent promotion policies 1 2 3 4 5

Encouraged participation in decision making 1 2 3 4 5

Had adequate Resources to perform the job 1 2 3 4 5

197
This questionnaire relates to customers public perception of bank’s performance
post merger and customer satisfaction and loyalty.

Respondent Profile

Gender Male [ ] Female [ ]

Less than 20 [ ] Less than 20 - 30

[ ]
Age

Above 40 [ ]

Student [ ] Employee
[ ]
Occupation
Self-employed [ ] Housewife
[ ]

Up to secondary [ ] Graduation
[ ]
Qualification
Post-graduation [ ] Above Post-graduation
[ ]

The following statements relates to your consideration about Bank merger. Please
encircle the selected response

I support the Banks decision to merge 1 2 3 4 5

I believe that the merger was necessary for the Banks 1 2 3 4 5

growth

I trust that the merger will bring positive changes to the 1 2 3 4 5

Bank

198
The following statements relates to your overall satisfaction level about Bank post-
merger. For the below mentioned statements circling 1 means you strongly disagree
with the statement and circling 5 means you strongly agree. Or you may circle any
number in the middle that shows how strong your opinion is

In general I am satisfied and happy with Bank’s 1 2 3 4 5

services post-merger

I have preferred using services of this Bank more 1 2 3 4 5

than other service providers of the industry

My Bank takes customer feedback very seriously 1 2 3 4 5

My Bank provides effective guarantee for service 1 2 3 4 5

failures.

My bank provides guidance for building and 1 2 3 4 5

maintaining long lasting customer relationships.

My bank delivers consistent customer service across all 1 2 3 4 5

the customer touch points and bank renders to the
availability of new products

The personnel of the bank are sincere, helpful, kind 1 2 3 4 5

and prompt in response

The bank has acceptable interest rates and improved 1 2 3 4 5

online banking facilities post merger

The personnel of the bank use an easily 1 2 3 4 5

understandable language while rendering the service.

199
Information provided by the bank is trustworthy and 1 2 3 4 5
bank does quick redressal of customer grievances

The bank has well designed enquiry counter ensuring 1 2 3 4 5

quick and proper reply to customer question(s).

The bank is equipped with modern facilities and 1 2 3 4 5

renders modern services to their customer

More numbers of Branches and ATM after merger has 1 2 3 4 5

helped in improving customer service in post-merger
phase.

The following statements relates to your bonding with your Bank post-merger. For
the below mentioned statements circling 1 means you strongly disagree with the
statement and circling 5 means you strongly agree. Or you may circle any number in
the middle that shows how strong your opinion is

I say positive things about Bank to other people 1 2 3 4 5

I intend to continue with Bank for further needs 1 2 3 4 5

I promote services of Bank to family and friends 1 2 3 4 5

I seldom consider switching to other Bank service 1 2 3 4 5

providers

I doubt that I would switch to other Bank service 1 2 3 4 5

providers

This Bank is simply the best to be associated with 1 2 3 4 5

I believe that this Bank is a good organization 1 2 3 4 5

I consider this Bank as my primary service provider 1 2 3 4 5

This Bank is my first choice when I need financial 1 2 3 4 5

services

I will use other products/services offered by the bank 1 2 3 4 5

200
in the future.

Whenever there are problems, they are quickly 1 2 3 4 5

addressed by my bank

The following statements relates to your perception of Bank performance post

merger.

For the below mentioned statements circling 1 means you strongly disagree with the
statement and circling 5 means you strongly agree. Or you may circle any number in the
middle that shows how strong your opinion is

Post-merger Bank has been offering many more 1 2 3 4 5

services

Post-merger Bank has opened more branches 1 2 3 4 5

Post-merger Bank has opened more ATMs 1 2 3 4 5

Post-merger Bank has recruited more staff for 1 2 3 4 5

effective operations

Post-merger peoples interest in the services of Bank 1 2 3 4 5

have improved

201