CROSS BORDER MERGERS AND ACQUISITIONS IN INDIAN BANKING SECTOR.

Mergers & Acquisitions (M&A) are a significant form ofbusiness strategy today for Indian Corporates. A large number of Mergers & Acquisitions deals are making headlines all over the world. One may wonder as to what it is that .necessitates Mergers & Acquisitions deals. One may be.interested in knowing the main objectives behind such deals. Mergers & Acquisitions may take different shapes. Simply, a merger is a transaction involving two or more corporations, swapping stocks, but only acquiring firm survives. Mergers usually occur between firms of somewhat similar size and are usually friendly. Acquisition is the purchase of a company that is completely absorbed as an operating subsidiary or division of the acquiring corporation. Merger and Acquisition refers to a combination of two or more firms into one firm; it may involve acquisition or consolidation. In absorption, one firm acquires one or more other firms. In consolidation, two or more firms combine to form a new entity. Mergers & Acquisitions activitie.s in banking sector have started greatly after 2003 when the heat of competition mounted and the Basel II norms were implemented. Basel II norm, which requires banks to maintain a minimum of 9% Capital Adequacy Ratio (CAR), forced the banking sector to look for consolidation of smaller and weaker banks with larger banks. Indian banks also started hunting for cross-border M & A. The State Bank of India (SBI) acquired majority stakes in Indo Monex, an Indonesian bank. And in another case SBI has acquired Mauritius based Indian Ocean inthe.year 2005 and Kenya based GIRO Commercial Bank in 2005. In this paper reasons for cross-border M&As by Indian banks are discussed. There is also description of the objectives·and various issues behind cross-border M&As. Finally, it gives a brief description on successful cross-border M&As in Indian banking sector.