A public sector banker-turned-columnist, who prefers being anonymous, recalls cracking jokes at his Indian Administrative Service (IAS) interview. He could afford to do so as he was not too keen to join the IAS cadre. This is because as a probationary officer of a state-run bank in the late 1970s, his take-home pay was substantially higher than what he would have got had he joined the elite IAS cadre. His then colleague Pradeep used to keep a close tab on all his college mates—who was working where and their salary. Pradeep continued with that practice until such time the bankers were topping the list. A few years later when his fellow college students started overtaking him, he stopped asking them about their pay cheques.

At Friday’s Mint South Banking Conclave in Bangalore, the columnist suddenly remembered Pradeep with whom he has lost touch for close to two decades since he had left the banking profession. The trigger was a remark made by one of the panellists at the conclave, Prakash Mallya, chairman and managing director of Vijaya Bank.

“We are offering market-related salary to get the best talent," Mallya said. “We are offering as much as what the big software firms such as Infosys Technologies Ltd and Tata Consultancy Services Ltd are offering at the entry level. But we cannot keep pace after a couple of years. Our increment structure is low and others overtake our boys easily."

The subject of discussion was human resource development in public sector banks. The panellists included six CEOs of public sector banks, based in South India, and two private sector bank bosses who had originally belonged to the public sector but later migrated to greener pasture.

Often one finds public sector bank bosses talking about lack of capital and its impact on their growth. Indeed, they need capital to support their growing assets. However, along with the financial capital, they do need human capital, too.

Between 2004 and 2007, India’s new private banks have grown their assets by 38% and their employee strength by 43%; for foreign banks, the assets have grown 27% and employee strength 22%. During this period, Indian public sector banks have seen their assets growing by 17% while the employee strength has actually gone down by 1%. According to an estimate of Indian Banks’ Association, the country’s premier banker body, between now and 2010 more than 63,000 public sector bank employees will retire and bulk of them are officers. Public sector banks, which collectively employ about 710,000 employees, need 500,000 new employees in next five years to maintain their growth.

The average age of a public sector banker is close to 50. In ICICI Bank Ltd, India’s largest private lender, the average age of employees is 28. So, it must start recruiting new employees fast. But this is not an easy task for the bank management as it is not in a position to pay well to attract talent. Besides, the government policy on reservation comes in the way of talent hunt. The bankers passionately discussed these issues. V.A. Joseph, a former state-run banker who now heads South Indian Bank, a relatively small private bank in South India, recounted the story of his close friend who lost his self-esteem after his son got his first pay cheque. “His wife told him that their son’s first salary is much more than what my banker friend has been earning after decades in the public sector. He did not have any answer," Joseph recalled.

Two issues that touched the raw nerve of the bank CEOs participating at the panel discussion were age and money. They accepted the fact that the industry has an ageing workforce but refused to admit that it has any impact on their work. “Age is in our mind. I always tell my employees, you must think young and feel young. I get the best out of them," said M.S. Sundara Rajan, chief of Indian Bank.

P.T. Kupuswamy, chairman and CEO of Karur Vysya Bank, squarely blamed the public sector bank chiefs for the current state of affairs. “You should ask for more freedom. You are deaf and dumb," he said. Mallya did not agree with him. “We are not deaf and dumb. We are vocal and we raise issues at every relevant fora," the Vijaya Bank boss maintained. But Corporation Bank chief B. Sambammurthy preferred to remain deaf when he was asked whether he is happy getting Rs5 lakh annual salary and Rs8 lakh performance-linked bonus while the CEOs of private sector banks are earning in crores. That was the last round of discussion and each panellist was asked to say just one line—whether they are happy with the money they earn or should they deserve more. The best response came from K. Ramakrishnan, chairman of Andhra Bank. “You would not know the kind of pride one enjoys in leading a public sector bank. We have the status which no money can give us."

Yours truly was the moderator of the conclave. After dinner as I was walking to my hotel room, one gentleman stopped me. He wanted to ask a question during the interactive session with the audience when the floor was thrown open after the panel discussion, but did not dare to as his chairman was on the dais. “Sir, the chairman can be proud and glow in the status of being the boss of thousands of people and running a huge asset book. But what about a person like me who has spent over 30 years in the profession and still a chief manager (the first tier of the executive cadre), earning a little over Rs3 lakh a year? How do I feel proud?" he asked. I didn’t have the answer. Dear Mr Ramakrishnan, what do I tell him?

Tamal Bandyopadhyay keeps a close eye on all things banking from his perch as the Mumbai bureau chief of Mint. Please email comments to bankerstrust@livemint.com