This article surveys the trend of consolidation in the banking industry worldwide. It also explores the motivations behind this trend. The possible motivations for mergers in the Indian context are next analyzed. Heightened competition, presence of scale economies, dis-intermediation and need for adequate capital are some of the factors that are found to exist in Indian banking as motivations for mergers. The article finds strong evidence of circumstances that might favour consolidation in Indian banking. It then looks at the preparations regulators need to make to proactively deal with the prospect of mergers. In particular it carries out a critical analysis of the Competition bill in light of the international regulations surrounding merger activity.