Santosh Rane (name changed) comes to office in his best formal clothes these days.

He even wears a tie. In his late forties, Rane has recently been promoted to the junior management grade.

In the large public sector bank where he works, Rane is called a field officer. Had he been working in a new private or a foreign bank, he would have been called a 'relationship manager.' Personally, he prefers that tag: 'relationship manager' sounds more respectable.

Rane is the face of his bank's new-found passion -- personal banking. He occupies the front desk of a personal banking boutique branch, wooing customers for home loans, car loans and sundry personal loans. He is the delivery point.

Of late, however, he has started taking leave frequently. He is also seeing his family doctor for high blood pressure, headaches and loss of appetite. His wife finds him a nervous wreck. His boss considers him incompetent.

But his bank does not have a choice. It wants to launch a new product every now and then for retail customers and to sell these products, the bank depends on thousands of JMG officers like Rane.

These officers were originally messengers, peons and clerks. Some of them got employment on compassionate grounds (if an employee dies while working in the bank, one member of his family gets a job).

Some of the junior officers were contractors' labour employed in sweeping and cleaning work in the seventies. A court judgment forced the bank to accommodate them in the payroll.

Once a peon or a messenger boy becomes a graduate studying in night schools (in some states, a graduate degree can  be bought even today), he dons the mantle of a clerk.

From a clerk to a junior officer is a long but sure destination in public sector banks unless, of course, the clerk does not want a promotion.

The main disincentive for promotion is transfer. An officer can be transferred but not a clerk. If a clerk follows the internal examination channel, he can become a junior officer perhaps by his early 40s.

Following the seniority channel --which is automatic -- his officerhood comes when he is close to 50. Those belonging to the backward classes can make it a little ahead of the others.

With this workforce, the bulk of which is suffering from  middle-age blues, can the public sector bank play the retail game with the new private and foreign banks? Let's look at some of the statistics.

The State Bank of India is possibly the most aggressive player today in the home loan market.

SBI Chairman A K Purwar wants to launch one new retail product every month to compensate for the lack of offtake in corporate loans. The bank has an employee strength of a shade over 200,000.

Only 20 per cent of the total employees or about 40,000 are officers. The rest is equally divided between clerks and sub-staff (which includes guards, peons, sweepers, water boys and even generator boys from the good old days).

If this is the case with SBI, the consolidated picture of the public sector banking industry is not very different. The total strength of the industry is 757,000.

The officers account for just about 30 per cent of this (2,09,288). In contrast, clerks comprise 50 per cent of the total work force (3,73,800) and sub-staff the rest (1,73,960).

The average age of public sector bank employee was about 45 two years back before the first ever voluntary retirement scheme was introduced, which saw over 11 per cent (110,000) employees marching out of the bank premises. Since then, the age profile has not changed much because more young employees opted for the VRS.

Now, take a look at the new private banks like ICICI, HDFC, UTI and IDBI.

The average age of the employees of a new private sector bank is around 30. And 70 per cent of these employees have additional qualifications -- they are CAs, MBAs or have diplomas in business management. These banks only employ officers as they do not want the hassle of tackling trade unions.

The number of women employees in private and foreign banks is higher than those in the state-run banks.

Is there any level-playing field? Can the big public sector banking industry really take on smart and nimble-footed competition with their legacy work force?

Possibly not. The root of the problem is the hybrid character of the Indian public sector banks. Technically, these banks are board-driven. The listed ones are answerable to their shareholders too.

But for all practical purposes, they cannot do the many things that private banks can. For instance, some of the banks want to introduce another round of VRS but the government has been sitting on their proposals.

Why do they need another round of VRS? Well, they want to bring down the age profile of the employees by infusing fresh blood.

But the income tax rules do not permit that and once the employees accept the VRS, the banks have to abolish those posts.

In other words, successive rounds of VRS cannot solve the problem since banks cannot hire new blood. Since 1985, the state-run banking industry has virtually stopped fresh recruitment except in some specialised areas.

The last bulk recruitment took place in 1982. Those employees, the youngest lot in public sector banks, are now in their mid-40s.

The over-staffed banking industry also cannot offer performance-linked special incentives to their employees.

First, they are not allowed to do so. Second, even at the current compensation level, their wage bill is very high because they are overstaffed.

Till now, these banks have been following the principle of redeployment to decongest overcrowded branches and supply new hands to those branches that lacked manpower. But this practice cannot continue forever.

Once these banks put in place the core banking solution, thousands of employees will overnight became redundant. It is another matter that the bank managements will take time to admit it as they do not want to antagonise the trade unions.

The State Bank of India, Bank of Baroda and Bank of India are in advanced stages of building their technology platforms. Other banks too are embracing technology with open arms. Once this phase is over, the private banking industry will lose its technology edge.

But the focus will then shift to the expertise of their employees which will differentiate a good bank from a bad one.

At that time, the managements of the state-run banking industry will find it difficult to hide JMG officers like Rane from the public glare.

But the tale of woe for the public sector banks does not end here. The Ranes in the industry may take a while to unlearn and change their mindsets, testing customers' patience.

But the time is rapidly running out for the government, the majority owner of these banks, in putting in place a transparent selection process for the senior management of its banks.

The Ranes are only the delivery points for personal loans but the CEOs are the face of the banks. The government does not have any policy for appointing them. Intense lobbying by politicians, bureaucrats and even the prime minister's office precedes the appointment of most CEOs.

For instance, for some chairmen, a two-year residual service is a must as this ensures a reasonably long period at the helm. But for a few others, the stipulation can be waived if the government finds them deserving candidates.

Similarly, there are occasions when the government thinks that the top posts at big banks can only go to those executives who first prove their worth as CEOs of smaller banks. At other times it feels that the lateral movement theory is all rubbish.

After all, a bank is a bank is a bank and there is no difference between a big bank and a small bank. Essentially, the rules are created or broken depending on who is in the fray.

The government may not have to invite a public debate on the merits of these norms. But after a decade of financial sector reforms, is it too much to expect a transparent appointment policy for the top posts in the state-run banking industry?