Consolidation in Indian Banking: A Comprehensive Study of PSU Bank Mergers

Abstract: This study evaluates the performance of recent PSB mergers in India, aimed at achieving scale and synergy for a $5 trillion economy. The consolidation reduced PSU banks from 21 to 12, intending to strengthen capital adequacy, asset quality, management, earnings, and liquidity. Using the synergy model (V(A*) > V(A)), it examines Bank of Baroda, PNB, Canara Bank, Union Bank, and Indian Bank, analysing pre- and post-merger data (2016–2024) from annual reports. The CAMEL model, enhanced with the Written-off Advances ratio, assesses performance. Findings show improved capital adequacy, lower NPAs, higher profitability, better liquidity, and operational efficiency post-merger. While consolidation has strengthened anchor banks, achieving global competitiveness requires greater administrative autonomy. This study bridges a research gap by integrating an additional financial ratio into the CAMEL model, offering a comprehensive analysis of PSU bank mergers’ impact on stability and competitiveness. Keywords: PSU Bank Mergers, Amalgamation, Synergy, Asset Quality, Written- off to Advances, Profitability, Banking Stability, CAMEL Model