The 2017 State Bank of India merger: impact on market concentration and a comparative analysis of corporate governance & performance with other public sector banks

Abstract

This study compares mergers and acquisitions in the Indian banking sector, with a focus on the State Bank of India (SBI) compared to other public sector banks. The goal is to understand how SBI's merger has affected competition and concentration in the banking industry. The study aims to determine how mergers impact SBI's corporate governance compliance, disclosure practices, and overall corporate performance and compare these to other public sector banks. The study finds that there is a growing concern in the public banking sector due to the increasing concentration of power and decreasing competition, which can lead to a limited number of leading firms dominating the market. This trend may accelerate if more mergers and acquisitions occur in the sector. After analyzing the data, the study reveals that SBI has improved overall corporate governance compliance and disclosure scores after the merger. However, there are areas such as board effectiveness, audit function, and disclosure transparency that require more attention and improvement. The study suggests that proactive enhancement in corporate governance can lead to higher governance standards, improved accountability, and increased stakeholder trust, which are essential for the long-term sustainability of the bank. Furthermore, the study highlights that SBI is performing well in many corporate performance metrics, but there are some challenges in addressing complaints and providing loans to priority sectors. To overcome these challenges, the study recommends implementing measures such as training employees to effectively resolve complaints and creating loan products that are tailored to the needs of priority sectors. Overall, this research provides valuable insights into the complex relationships between mergers and acquisitions, corporate governance, and corporate performance in India's public banking sector. How mergers and acquisitions lead to market concentration and reduction in the competitive environment. It contributes significantly to existing knowledge and has important implications for policy-makers, regulators, and bank executives.