Escalating Relationship between NPAs and Mergers and Acquisitions of Indian Commercial Banks
The Indian banking sector in general and the public sector banks, is facing a serious problem of mounting NPAs. In fact, NPAs serve as an indicator of the performance of banks, financial institutions, and country. Banks and financial institutions face various risk viz., operating risk, credit risk, management risk etc. Of these, credit risk is chiefly responsible for causing the problem of NPAs in the financial system of a country. NPA not only exists in the Indian scenario, but it also exists in foreign countries. Though there is legal framework and regulatory mechanism in India, still huge NPAs occur in Indian commercial banks. This shows that it is difficult to eliminate NPAs entirely, which can only be kept under control with the help of identifying the causes, impact and ways and means of managing NPAs. Therefore, there is a need for identifying the reasons for mergers and acquisitions in commercial banks, the impact of M&A towards the banking performance; and also to find out the relationship between NPAs and mergers and acquisitions of select commercial banks.
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