A LEGAL ANALYSIS OF MISMANAGEMENT IN MERGERS AND ACQUISITION OF BANKING AND NBFCs

ABSTRACT:
Mergers and acquisitions (M&A) in the banking and non-banking financial companies
(NBFCs) sector in India is a crucial mechanisms for financial consolidation, market
expansion1, and the resolution of distressed entities. While such transactions are often
supported by regulatory intervention to ensure systemic stability and protect stakeholders, they
also present significant risks of mismanagement due to their inherent complexity and regulatory
asymmetries.
This study examines the legal and practical dimensions of mismanagement in M&A
transactions, focusing on issues such as inadequate due diligence, weak corporate governance,
asset misvaluation, and post-merger integration failures. It critically analyzes the existing legal
framework, including the Companies Act, 2013, the Banking Regulation Act, 1949, the
Reserve Bank of India Act, 1934, and the Insolvency and Bankruptcy Code, 2016, along with
regulatory guidelines issued by the Reserve Bank of India.
KEYWORDS: Mergers and Acquisition, Banking Sector, Non-Banking Financial
Companies (NBFCs), Mismanagement, Due Diligence, Corporate Governance, Financial
Stability, Fiduciary Duties, Judicial Review, Regulatory Oversight.
1 Ingo Walter, Mergers and Acquisitions in Banking and Finance: What Works, What Fails, and Why (Oxford