The objective of this study is to examine the impact of mergers and acquisitions (M&A) on the efficiency of Indian banking institutions, with special attention to the large-scale public sector bank consolidations of 2020. Spanning sixteen years (2007–08 to 2022–23), the study captures the effects of global shocks and domestic reforms shaping the sector. Methodologically, efficiency levels are measured using the Data Envelopment Analysis (DEA) technique, while paired sample t-tests are employed to test the study’s hypotheses. A distinctive contribution lies in the inclusion of “cash and balances with the Reserve Bank of India (RBI)” as a novel variable, offering fresh insights into liquidity management and operational efficiency in the post-merger context. The findings reveal a strong positive relationship between M&A activity and enhanced bank efficiency, with marked improvements following the 2020 consolidations. These results underscore the validity of the efficiency or synergy theory and provide meaningful implications for academics, policymakers, regulators, banking professionals, and investors.
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