Patna: In a major relief for lakhs of government employees and pensioners, the Bihar government has approved a fully digital loan facility that will allow eligible beneficiaries to access salary and pension advances without relying on agents or private lenders.
Under the newly introduced “On-Demand Salary/Pension Advance Scheme”, employees and retired pensioners will be able to avail loans of up to 30 times their monthly salary or pension through banks and financial institutions empanelled by the state government.
The Finance Department, which will act as the nodal agency for the scheme, said the entire process will be paperless and integrated with the state’s Comprehensive Financial Management System (CFMS) and Human Resource Management System (HRMS). Officials said the move is aimed at ensuring quicker loan approvals, transparent transactions and automatic EMI deductions.
The government said many employees facing sudden financial emergencies often fall prey to private moneylenders and unregulated finance companies that charge steep interest rates. The new digital system has been designed to prevent such exploitation by providing an accessible and regulated alternative.
According to the proposal approved by the State Cabinet on May 6, employees will be eligible for short-term salary advances for up to 60 days. If the amount is repaid within the same or the following salary cycle, no interest or processing fee will be charged.
In addition to short-term advances, beneficiaries will also have access to long-term loans with repayment periods ranging from two months to five years. The monthly EMI, however, cannot exceed 50% of the employee’s net salary or pension to ensure household expenses are not adversely affected.
Officials said the platform will remain accessible round the clock, enabling employees and pensioners to apply online without visiting government offices or dealing with intermediaries.
The Bihar government has also decided to implement the scheme under a “Zero Cost and Zero Liability Model”, meaning the state will not bear any financial burden. All lending risks, including recovery of dues, will be handled by the participating banks, while the government will function only as a guarantor.
A Finance Department resolution stated that the scheme will operate in compliance with Reserve Bank of India (RBI) guidelines and relevant information technology laws. Banks selected through a tender process will also be required to clearly disclose all applicable charges, conditions and repayment terms to customers.
The facility will be available to all serving government employees as well as retired personnel receiving pensions. The government believes the initiative will strengthen financial security for employees while reducing dependence on informal borrowing networks.
