Private banking is the fastest growing segment in the banking industry, but PSUs like SBI have not been able to make a dent in this segment. That's because of their inability to hire talent at market rates, reports CNBC-TV18.

According to a study conducted by DSP Merrill Lynch and Cap Gemini, there are 83,000 millionaires in India. This segment they say is growing at 19 per cent, but only 10 per cent of these High Net-worth Individuals are being tapped and that too by private and foreign banks.

PSU ginats like SBI have tried to make an entry; SBI launched a pilot project in 100 branches in select urban areas and has 3,000 of its employees certified by the IRDA and AMFI to sell insurance and mutual fund products.

According to sources at SBI, this pilot project has failed to take off because of a lack of skilled and trained financial advisors or relationship managers.

Senior PSU bankers echo this sentiment and say that they haven't been able to hire capable relationship managers who can offer specialised advice to High Net-worth Individuals as they are unable to pay them high compensation packages.

While a relationship manager at a private or a foreign banks earns from Rs9 to Rs12 lakh a year, a PSU bank official of the rank of deputy general manager makes only Rs2.5 lakh per annum.

Since the strict service rules don't allow banks to pay more, SBI is now seeking to work around this issue by using its wholly owned subsidiary SBI Commercial and International Bank, for its wealth management business.

SBI sources say since SBICI is a private bank, it will be able to hire the much needed sales force on competitive compensation packages and hopefully make a dent in the private banking space.