ABSTRACT Recent reports on banking sector often indicate that India is slowly but surely moving from a regime of `large number of small banks' to `small number of large banks'. The aim of this paper is to probe into the various motivations for mergers and acquisitions in the Indian Banking sector. Thus, literature is reviewed to look into the various motivations behind a banks’ merger/ acquisition event. The paper also takes us through the international mergers & acquisitions scenario comparing it with the Indian scene. Given the increasing role of the economic power in the turf war of nations, the paper looks at the significant role of the state and the central bank in protecting customer’s interests vis-à-vis creating players of international size. While, gazing at the mergers & acquisitions in the Indian Banking Sector both from an opportunity and as imperative perspectives, the paper also glances at the large implications for the nation.

INTRODUCTION Generally speaking a bank is an institution dealing in money. The origin of the word bank is traced to the Italian ‘banca’, ‘banc’ or ‘banque’, which means a bench. It is stated that in Middle Ages the European money changers and moneylenders displayed their coins on their benches and conducted their business. Hence the term bank refers to the bench on which the business of money changing and money lending was conducted. Hence, the term banking is defined as accepting for the purpose of lending or investment, of deposits of money from the public repayable on demand or otherwise and withdrawal by cheque, draft, and order or otherwise. In the recent past, the Indian banking system has been undergoing major changes that have affected both its structure and the nature of strategic interaction among banking institutions. Different strategies have been adopted to tackle the demands of this new operating