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September 5, 2025

Asset Quality and Operational Performance of Indian Public Sector Banks- Pre- and Post-Merger Analysis

Key Points

The analysis reveals significant improvements in asset quality and operational metrics in some banks post-merger, while others faced ongoing challenges.
Examining both Gross NPAs and Net NPAs provides insight into the complex dynamics of mergers and their differentiated impact on banks.
The study employs descriptive statistics over five years, highlighting the need for tailored approaches in managing mergers for sustainable outcomes.
Findings underscore the importance of historical conditions and strategic adaptability in shaping the outcomes of bank mergers.

Abstract

This paper examines the impact of recent mega mergers among India’s public sector banks on asset quality and operational efficiency, employing descriptive statistics over five-year pre- and post-merger periods for five major Indain public sector banks By analysing change in Gross and Net NPAs alongside changes in branch networks and workforce size, the study uncovers varied outcomes: while several banks achieved notable improvements in asset quality and operational metrics, others continued to grapple with integration hurdles and legacy-driven challenges. The results underscore that merger outcomes are highly bank-specific, shaped by historical conditions and strategic adaptability, and emphasise the need for nuanced, institution-tailored approaches by policymakers and management when pursuing sustainable consolidation and enhanced financial robustness. The findings also highlight the complex, bank-specific impact of mergers in the Indian context and suggest that structural reform outcomes depend greatly on the interplay of legacy factors and operational strategy

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