A day after the government announced its decision to inject Rs Rs 2.11 lakh crore into recapping the banks, Chief Economic Adviser Arvind Subramanian made a case on October 25 for consolidation of banks into 5-7 large lenders. Quoting former RBI Governor YV Reddy, he added that the aim must be to shrink or narrow the scope of the unviable banks. In an ideal banking world of tomorrow, India needs to have both large public sector and private sector banks, competing domestically and being competitive internationally, he said in a lecture at SGTB Khalsa College in New Delhi. In this context, he mentioned China which, according to him, has four big banks which are now amongst the biggest in the world. Talking about the recapitalization, he said that it must be selective and incentive-based, directing it to those banks where the buck in terms of new credit creation will be maximum. "Since all banks must maintain a minimum capital adequacy, one possibility would be to recapitalize the unviable banks only to the extent necessary to finance their current balance sheet size while explicitly not providing for their growth," he said.