The increasing non‐performing assets (NPAs) and to meet the higher funding needs, India witnessed the biggest consolidation in public sector banks. In India the surging NPAs is long witnessed concern and major economic reforms were initiated in Indian banking to curb the issue. The recent merger has brought in a major policy concern with this consolidation which is availability of loans to smaller businesses. The paper analyses the impact of banks consolidation on Indian economy by considering both positive as well as negative aspects of banks mergers. The paper also presents the history of Indian banking and recommending a way forward.