ANALYSIS OF PRE MERGER AND POST MERGER PERFORMANCE OF PUBLIC AND PRIVATE SECTOR BANK-SBI & HDFC

Abstract

Despite the global financial crisis or slowdown in the economy, the fastest growing economy in the world, India economy has to maintain its leading position. RBI (Reserve Bank Of India) has the authority to regulate all the Banks. Banks are divided into public and private sector bank in India and both have their different market capitalization. Banking sector has witnessed many tremendous mergers in previous years. This Project is about the performance of both the sector of bank i.e. public and private sector bank in two scenarios before the merger and after the merger. By taking the market capitalization as a main factor the banks had been choose for the project. As SBI (State Bank of India) has the market capitalization of 297858 crore in public sector and HDFC in private sector of694359 cr. Both the banks face a major merger in 2008 in their own sector because of financial meltdown. State Bank of India merged with State Bank of Saurashtra and HDFC with Centurion Bank of Punjab. SBI is an Indian public sector company which deals in financing and banking. The headquarter ofSBI was in Mumbai, Maharashtra. It is a government owned organization. In the Future Global 500 of world’s biggest corporation SBI ranked as 236th. 23% market share in asset, ¼ of the total loan deposit is held by SBI, the largest bank of India. The first step toward merger of SBI was taken in 2008-2009 reducing the no. of bank from seven to six. HDFC is as private bank established in 1994. The headquartered of HDFC bank was situated in Mumbai, Maharashtra. It has largest market capitalization which lead HDFC to be the largest private bank. HDFC provide large number of products and services including different types of loans such as private loans, property loans, two and four wheeler loans and auto loans too and also deals in wholesale banking, retail banking. Banking Sector plays an important role in every economy and also the fastest growing and developing sector in Indian economy. The competition is intense between domestic banks-public and private sector bank with multinational banks. 20 public banks, 44 foreign banks, 44 regional rural banks,22 private banks and 1542 urban cooperative banks comes under Indian Banking System. As banking is a growing sector they started mobile banking, internet banking, and various extensions at the ATM station. Mergers in India are common aspect to grow after the New Economic Policy in 1991. The main reason behind this is to improve the functioning of banks and widen its capital base by merging the weak bank with the strong banks. Both the Banks HDFC and SBI are the top most banks in their own sector. The main focus is on integrated approach to risk management adoption. The NPA’s of commercial banks records a recovery of 400000 cr. which is highest in the last 4years. Total credit extended by commercial bank in financial year 2019 was Rs.90.81 lakh crore and deposit grew to Rs. 120 lakh crore while on the other hand compare it with the last year FY18 asset of publicsector bank stood at Rs. 108.82.