Since 1990s, liberalization and financial sector reforms, which are the merchandise of globalization have resulted in bringing to the fore the problem of profitability and efficiency of the banks. The extraordinary competition among the banks and therefore the simultaneous decrease in the interest margin has created an immense pressure on the profitability of the banks. With entry of personal and foreign banks, deregulation of interest rates and a high level of competition, the business of the banks are not any longer confined thereto of merely accepting deposits and lending them at administered rates. In such a changed economic scenario as this, only those banks which are able to adopt appropriate cost control mechanism and customer oriented approach would be able to survive. This deregulated environment demand an increased use of recent risk management tools, exploration of avenues of enhancing the non-fund based income, control of the expenses and increased use of knowledge and communication technology to make sure viability and survival in an environment of intense competition. It’s precisely during this context of a highly competitive business environment that mergers and acquisitions have assumed a particularly vital role as a crucial corporate strategic instrument for increasing the competitiveness of the banks. In recent times, the banks in India have adopted mergers and acquisitions (M&A) as a business restructuring strategy with the expectation to enjoy the efficiency gains brought in by such mechanism. The crucial role of M&As in shaping the restructuring strategy of the Indian industry in future is the main motivation for the current study. There are some studies conducted to look at the impact of bank mergers by employing either an accounting based or market based approach, with all having its own strengths and limitations.

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Keywords: Economic Scenario, Risk Management, Mergers, Acquisition, Efficiency, Strength.