More than the issues of capital infusion and technology upgrades, human resources pose a critical challenge in meeting the rising demands of the banking industry, especailly among state-owned banks, Janmejaya Sinha, mapnaging director of Boston Consulting Group (BCG) said on Thursday.

In an interactive session with The Financial Express Mumbai team, Sinha said, ?HR challenges would be the most critical factor for these banks in maintaing the market share.?

While domestic private sector banks are expanding their manpower to match the business growth, public sector banks were faced with a large attrition rate of over 30 % and are expriencing an overall deceleration in the number of employees.

?It takes as long as 18 months for the recruitment process of a typical state-owned bank to be concluded and of the candidates shortlisted, many drop out on their own,? he lamented.

Going forward, it would be tough to manage business as there is high competition for high-skilled jobs, he said. Also poor planning and budgeting add to the woes of state-owned banks.

?Incentivisation of government bank employees too have failed as the fear of probe by various regulators and government agencies deter the top management from doling out huge sums as rewards to performing staffers,? said Saurabh Tripathi, partner and director at BCG.

In the last seven years, public sector banks have lost 10% market share to the agressive private banks. By 2011, the population of youth aged between 20 and 29 years is expected to cross the 27-crore mark in India, and this segment is more likely to be attracted to the state-of-the-art banks that would have a similar age bracket generation across the counter.

Public sector banks were more likely to be seen as an older generation organisation where the average age group would be 50 years, Sinha said. ?Public sector banks therefore need to implement right strategies to woo young techno-savvy customers that prefer alternative channels to traditional banking methods.? According to Sinha, the financial sector services is undergoing a rapid change in terms of the demographics, regulatory requirements and technology because of the high revenues generated.