Azeem Ahmed Khan's 2011 research investigated the many different factors that drive mergers and acquisitions in the Indian banking industry. He came to the conclusion that the mergers and acquisitions had a good impact on the financial institutions. These findings also revealed that banks that combined may achieve efficiency and profitability via mergers and acquisitions, and that they could pass the gains on to equity share holders in the form of dividends.

Devarajappa S., (2012) investigated the many different driving forces for mergers in the Indian banking sector. In addition to this, he compared the pre-merger and post-merger financial performances of the banks that had been merged using various financial standards such as operating profit margin, gross profit margin, net profit margin, return on equity, return on capital employed, debt equity ratio, and so on. The findings of the research suggest that bank mergers are generally beneficial to the industry as a whole.

Need for Consolidation of Banks
1. Economies of Scale: According to an Assocham poll, the size of Indian banks in terms of assets is much too small to make the most use of their capacity to generate money at globally competitive rates. This conclusion was reached based on the fact that Indian banks are quite modest in terms of assets. In contrast to the banking systems of European countries, where the assets of only the top five banks have soared to four times the amount of GDP even after the global financial crises, the combined value of the top ten banks in the United States is less than sixty percent of total GDP.
2. The Size of Indian Banks Is Inadequate: Despite the fact that India is the second biggest expanding market for banking services after China in terms of the number of rich households, just two Indian banks are among the top 100 global banks by tier I capital, according to the ASSOCHAM Chief. These banks are the State Bank of India, which is ranked 64th, and ICICI Bank Ltd., which is ranked 81st. Tier I capital is a key indicator of a bank's financial soundness, and it is mostly comprised of shareholder capital. In the same way, India's assets are vast. On the other side, ICICI Bank Ltd., the private sector's most significant bank, has climbed to 148th position. There are no other Indian banks in the top 200 global banks in terms of total assets.
3. Many experts in the area of banking find that, due to the fragmented character of the banking system, Indian banks are unable to compete on an international level in terms of the mobilization of funds, the disbursement of credit, investment, and the provision of financial services. The financial statements of the most prominent Indian banks show that there is significant room for improvement via the process of consolidation in order to achieve the advantages of big, internationally competitive Indian commercial banks.
4. The merger will result in a greater use of available capital: Additionally, consolidation will boost the effectiveness of the use of capital. • Would Decrease NPA: At a time when nonperforming assets (NPAs) are piling up and banks are putting all kinds of effort into recovery, the potential to recover via a limited number of banks will be greater, but the exposure of individual banks may go up. This is the case due to the fact that there are a limited number of minds, in contrast to the joint lenders' forum, which has a large number of minds. Additionally, since each bank has a unique right with regard to its borrower, they frequently do not come to an agreement regarding a unified recovery strategy. The recovery will have a more concentrated effort with consolidation. Therefore, consolidation may result in a lower NPA in India.
Benefits of Bank Merger
1. The cost of the banking procedure will be reduced as a result of the merger.
2. The goal of financial inclusion and the geographical growth of the Bank may be accomplished more effectively via the consolidation of major banks into the public sector and the use of the expertise offered by these institutions.
3. The consolidation of operations will result in improved risk management and NPA.
4. When small banks have employees with vast knowledge in all aspects of banking operations, the number of inefficiencies they suffer will decrease significantly.
5. The merger will assist regionally focused regional banks in expanding their reach to a wider geographic area.
6. The scale of the major bank will assist developing banks offer more policies and services, which will contribute to the overall expansion of the banking industry. This will also help the large bank compete more effectively.
Integration will contribute to higher professional standards, which will be improved as a result.
7.  The biggest SBI is able to more effectively manage liquidity both in the near term and over the long run. Because of the Liquidity Adjustment Facility (LAF) and the Terminal Marginal Facility, there would be no need for overnight borrowing in the money market or from the Reserve Bank of India (MSF).
On the international market, greater recognition and high credentials are destined to be bestowed upon Indian financial institutions.
8. The central government will have a substantially easier time recapitalizing public-sector banks as a result of a higher capital base as well as better liquidity. This will result in a major reduction in the burden placed on the central government.
9. A number of roles for managers of CMD, ED, GM, and Zonal will be removed, which will result in considerable savings in terms of both time and money.
10. The Bank's employees will no longer be subject to different conditions of employment or pay scales since these aspects of their employment will be unified under a single policy.
Side Effects
1. The needs of local communities are a primary priority for many banks. It is no longer possible for the bank to fulfill its primary mission, which was to cater to the requirements of the local community, as a result of the merger. It's possible that larger bank sizes may cause additional issues. The global financial crisis caused several large global banks to fail, while smaller ones survived the crisis due to their strengths and objective of serving micro aspects. Along with the mergers, the problems of the small banks get transferred to the larger bank. • Along with the mergers, the problems of the small banks get transferred to the larger bank. To this point, it has been shown that tiny banks may renew their capital bases via the use of modest losses and recapitalization. Now, if the banking behemoth SBI exhibits massive loss as a result of high non-performing assets (NPAs), as it had been incurring, it would be a challenging challenge for the whole banking sector to maintain its stability.
 Key Challenges
1.  It is important to keep in mind that in an expanding and active economy, it is possible to run an effective and profitable bank without aiming to be a high-priced lender or creating a large balance sheet that is subject to scrutiny on a global scale. This is something that should be kept in mind because it is useful. An impartial evaluation of the extent of mergers in the PSB should investigate if there are other options that should be taken into consideration for the long-term safety of "weak" power distribution centers. These alternatives may help alleviate the need for further cash.
2. PSBs are faced with the primary problem of significant talent shortages as well as the unavailability of appropriate personnel in sufficient numbers, regardless of which option for restructuring they choose: integration or any of the others. Nearly many PSB devices in fusion radar lack the skilled personnel necessary to successfully manage even the procedures that are already in place.
3. Numerous case studies have proven that merger advertisements cause workers to experience feelings of bewilderment, worry, and insecurity, which in turn slows down operations. The management of subpar personnel and ineffective communication can make these difficulties much more difficult to overcome. In order to put into action an efficient strategy, PSBs need leaders that are mature, possess a solid operational knowledge base, possess persuasive abilities, and have the capacity to develop a varied team.
4. Because top PSB executives are only there for a limited period of time, it is impossible to initiate any kind of strategic effort. At different levels, proposals have been kept on how to attract the proper talent to the PSBs, as well as how to guarantee that staffs stay for a longer period of time on paper.
5. As a result, the first thing that has to be done is to foster talent in the institutions that will serve as "anchors" before beginning mergers. It should be highlighted that among other things, one of the things that ought to be examined is the possibility of employing qualified personnel in the market and enticing experienced executives from other banks by giving higher compensation packages.
6. The leadership of talented individuals must be able to work on blending the cultures of two tiny institutions. Culture continues to be the most significant obstacle to successful integration in every region of the globe. In spite of the fact that the PSB has a very distinct culture that is identical across the board, there are significant differences in the geographical backgrounds of its members as well as other intangible elements. Although private banks have attempted to create a cohesive culture by implementing certain severe steps, such as requiring segregation of personnel (which was applied by ICICI to the Banco de Madura team following its merger in 2001), this kind of practice is uncommon in PSB.
7. The PSB may have a difficult time integrating human resources in areas such as those pertaining to remuneration, publishing, and performance assessment. Although this was quite improper in the merger of the National Central Bank with the new bank in India, it is known that the IDBI Bank has recently gone through several problems in attempting to rationalize the human resources policies of the former development bank employees with the flow of commercial banking services. • The IDBI Bank has recently gone through several problems in attempting to rationalize the human resources policies of the former development bank employees with the flow of commercial banking services. Another significant obstacle is in the form of modern technology. There is no resemblance in the IT architecture of the PSB, since each bank employs numerous vendors to construct their own system. This is in contrast to the merger that occurred with the SBI. Currently, banks are at varying phases of the process of adopting new projects with either their present suppliers or additional suppliers. In the newly combined business, achieving consistency and putting in place a shared system that comprehensively addresses all facets of banking will be a task that may take a significant amount of time.