Strategic Union: Merger Of Banking Giants Creates Financial Powerhouse

Sanket Shivansh, Chanakya National Law University, Patna

INTRODUCTION

Any nation's economy is heavily reliant on the health of its financial institutions, particularly its banks. Banking has existed since the dawn of human civilization, albeit not in the same form as it does now. This is because the banking system that we have now is a product of the evolution of the human race over geological time. The Banking Regulation Act of 19491 consolidated the laws pertaining to banking in India. This act, which governs every facet of the banking industry, is a comprehensive code unto itself. Banking is the act of receiving deposits from the general public for the purpose of lending or investing, repayable upon demand or otherwise, and with drawable by check, draft, order, or otherwise.

As a result, every business that conducts banking operations in India is regarded as a banking company. On the other hand, businesses that take public deposits only to fund their operations are not considered to be conducting banking business. Reconstruction is a process that involves taking over, demerging, merging, and other similar processes as a means of adjusting to the economic shift. As a result, financial institutions, like other businesses, might need to rebuild in order to survive in the marketplace. With technology developing at a quick pace and corporate competition rising, mergers and acquisitions, or "M&A," are the smart move and a useful tactic to break into new sectors. Businesses that want to expand into new markets and overcome their unprofitable state frequently use this strategy. But because banking includes a significant amount of public interest, it must be conducted under the supervision and approval of the nation's top banking organization, the Reserve Bank of India. The Banking Regulation Act of 1949 governs the amalgamation/merger of banking companies, and the Reserve Bank of India and the Central Government are required to play a major part in this process.