Consolidation in the Indian Financial Sector

The financial services sector in India (both in the banking and non-banking finance industry) has witnessed consolidation over the last few years through various mergers & acquisitions. This trend will perhaps continue in the future as well. A recent speech by V. Leeladhar, Deputy Governor of the Reserve Bank of India contains a good overview of the statutory and regulatory framework that governs consolidation (particularly mergers) in the Indian financial sector. This includes:

– voluntary amalgamation among private banks;
– compulsory amalgamation of private sector banks;
– merger of public sector banks;
– merger between a private sector bank and a non-banking finance company
(NBFC);
– merger of a housing finance subsidiary with the parent public sector bank;
– consolidation of development finance institutions;
– consolidation of regional rural banks.

The speech contains an overview of the regulatory provisions under which such mergers can take place, and also provides examples of mergers that have taken place under each category.

About the author

Umakanth Varottil

Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore. He specializes in corporate law and governance, mergers and acquisitions and cross-border investments. Prior to his foray into academia, Umakanth was a partner at a pre-eminent law firm in India.

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