Generally banks are considered as a financialinstitute which has given the authenticity by the central government or stategovernment in securities. The main role of banks is day to day changing in theworld of economy and growth of investments sectors. After globalization thebanking sector is taking so many changes. These changes are making a greatimpact on the banks, both structurally and strategically. Banking sectorusually affected through globalization, the banking sector is going to make somany changes in the banking regulations.
These changes have affected thebanking sector in a structural way. The dynamic environment has led to theadaption of many changes in this sector so as to remain efficient. One of themost important strategies is merger or Acquisition. The changing times has ledthe Indian banks to move from many small banks to a system where there arelarger banks but smaller in number. Indianbanks background mirror The bank ofHindustan was established In the year 1870. After that under the Presidencybanks Act 1876, three presidency banks namely the Bank of Calcutta, Bank ofBombay and Bank of Madras were start up. These banks have fall down thefoundation of modern banking in India. In the year 1921, all the three banksmerged and formed the Imperial bank of India.
The RBI was not established andtherefore these banks carried out the Central Bank functions but limited innumbers. The RBI has authorizedto control and supervise the nationalized and commercial banks. The RBI want toacquired fully control on the Imperial Bank of India stat up in 1955 which beknown as The State Bank of India, SBI in the year 1959 took over eight privatebanks. In 1969, the govt. of India nationalized 14 banks.
Later in1980.government acquired six more banks .Bank is the backbone of growth of acountry’s economy. Processof Restructuring of weak banks Merger is a main weaponthat has been adopted by the Government of India to restructure weak banks. So manyweak bank mergers have taken place for the protection of the interest of accountholders. If any bank declares big sickness like NPA, the RBI imposes moratoriumas per Section 45 of the Banking Regulation Act of 1949.
The Indian bankshave faced many economic and business crises. A lot of changes were broughtabout by means of rules and regulations which prevented Indian banks from theeconomic crisis. In the recent times, the banking scenario in India has becomevery dynamic. In the 1949 Reserve Bank of India was nationalized and empoweredRBI to inspect and control all the commercial banks in India. It’s would be asper the Banking regulations act and it recessionary for new banks or branchcould be opened without a license from Reserve Bank of India. Section 7, the registrarshas accompanied on merger or Acquisition applications.
The bank merger willtake place only with the final approval of the registrar. The pre-mergerconsent of the registrar gives the banks No Objection and the approval enables.The pre-merger consent stage requires the following documents: · An application by the banks opting for merger to theregistrar signed by the managing director. · The successor bank’s proposed name. · A statement stating objective of the merger. · A copy of the agreement of the proposed merger. · A copy of the articles of association and memorandum ofassociation of banks opting for Mergers.
· A resolution by the board of directors of the mergingbanks giving the authority to the management to further proceed with the mergernegotiations. · The successor banks list of new shareholders along withtheir addresses and information about their shareholdings. Theregistrar necessary may grant the final approval of the merger A few moredocuments need to be submitted for final approval. · An application by the banks opting for merger orAcquisition addressed to the Registrar as well as bearing the signature of theManaging Director and the Chairman of the merging companies. · The successor bank’s proposed memorandum of association.
· The successor bank’s Registration certificate. · Resolution of the Board from the merging banks regardingthe approval of merger. · Resolution of the shareholders approving the merger. · List of shareholders with their addresses andshareholdings.