Patna: Despite consistent government efforts, Bihar continues to struggle with a low credit-deposit ratio, significantly below the national average. A major reason: banks remain cautious about disbursing loans due to the state’s persistently high level of non-performing assets (NPAs).
The NPA rate in Bihar currently stands at 7.57%, nearly three times the national average of 2.8%. According to data shared by the banking sector, of the Rs 3.19 lakh crore in total loans distributed by banks in the state, Rs 24,170 crore has turned into NPAs.
While the state government and banks claim the overall NPA trend is on a decline — falling from 11.5% in June 2022 to 9.05% in 2023 and further to 7.57% in March 2025 — it remains well above desirable levels. Officials believe regular loan recovery, particularly from rural banks, could further reduce the NPA burden. However, the time and human resources required for recovery have led many banks to adopt a more cautious lending approach — a move experts warn could hamper Bihar’s economic development.
The agriculture sector, a cornerstone of Bihar’s economy, has emerged as a particular point of concern. Despite government pressure to boost agricultural lending, banks have reportedly slowed disbursals in this sector due to high default rates. As of March 31, loans worth Rs 94,461 crore were issued in the agricultural sector, of which Rs 15,483 crore (16.39%) has become non-performing.
Contrary to common perception, officials note that the bulk of these defaults stem not from small and marginal farmers but from larger landholders failing to repay loans. “Unfortunately, small farmers are paying the price for defaults they didn’t create,” said a senior bank official.
Rural banks are the worst hit, with an alarming NPA rate of 21.34%, compared to 6.98% for government banks.
