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Banks play a vital role in the economic prosperity of any nation. Since 1991 the banking sector in India undergone radical reforms both in technology and services front. Today banking institutions in India are technology driven and doing vibrant operations par with foreign banks. The economic reforms led large number of mergers and acquisitions within India. The present study conducted for a period of ten years from 1995-‘96 to 2004-‘05. The secondary data were collected from different official sources like RBI, PROWESS and other prominent websites. This study aims to know the operational performance of merged banks before and after merger as well as factors influencing the operational performance of those banks using discriminant analysis. VOLUME NO: 1 (2010), ISSUE NO. 02 (JUNE) ISSN 0976-2183 !/0 ! / 1! 2 13 ! 2 1 0 0 &( ! &1 0 &0 4 ! 0 0!/ . - #57 INTRODUCTION The Indian business environment has been altered radically since 1991 with the changes in the economic policies and introduction of new institutional mechanism. This change in the business environment, which is the effect and impact of Liberalization, Privatization, Globalization, Information technology and Financial awareness, has contributed fuel to a dynamism in the Indian Economy. Economic environment in India has been made more favorable for the growth of the various business enterprises along with competitive strength. Such growth, opportunities and challenges come in various shapes and size in the dynamic global market environment require innovative approaches. In order to meet the needs and requirements of financial stack holders and other players in the market, it is necessary to reorient the strategies adopted by the firms. These strategies considered opportunities for growth both internally and externally. The sweeping wave of economic reforms and liberalization has transformed the business scenario all over the world. The most significant development has been the integration of national economies with market oriented globalised economy, resulting in shrinking of the size of the market. And it becomes externally difficult for all the companies to survive, unless they cut cost and maintain price. In such a situation M&A which facilitates elimination of duplication of the administrative and marketing expenses is inevitable. To fund this M&A activities and also to continue the business activities on a large scale, the traditional customers of a banker turn away increasingly from traditional loan to new alternative services. As a result of changes in the expectations of the corporate customers, banks are constrained to rethink their business and devise new strategies to face the challenges before them. Moreover, foreign banks have been permitted to bring their share up to 74% in the Indian banks. This adds more oil to the spreading fire. The foreign banks would consider M&As as a quick method of inorganic growth. Therefore, Indian Banks are also forced to think on the same line to face the competitions effectively. VOLUME NO: 1 (2010), ISSUE NO. 02 (JUNE) ISSN 0976-2183 !/0 ! / 1! 2 13 ! 2 1 0 0 &( ! &1 0 &0 4 ! 0 0!/ . - #8$ In the changing scenario, every business including service institutions like banks strive hard for survival in this growing era of core competence. Due to intense completion among the banks, every bank is doing something better than others to capture the business. It is necessary for any business firms to analyze its financial health. In this regard, it is necessary to analyze the financial health of merged banks to establish its financial health in the form of profitability, liquidity, solvency etc. This analysis provides a clear picture of the financial soundness of a firm and a road map outlining the directions the business is heading to. So an attempt has been made in this present chapter to have an insight into the examination of financial health of merged banks in India selected for the study.
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