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Bihar Banks Underperform: Credit Gap Widens
16 Dec, 2025
Summary
- Bihar's credit-deposit ratio stands at a low 52.8% in 2024.
- Public sector banks hold 75% of deposits but disburse only 59% of credit.
- 28 out of 38 Bihar districts are classified as credit deficient by NABARD.
Bihar's banking sector exhibits a concerningly low credit-deposit ratio (CDR) of 52.8% as of 2024, significantly below the desired 70-80% range. This indicates a substantial gap between funds mobilized and credit disbursed within the state.
Public sector banks in Bihar, which collect 75% of deposits, account for only 59% of advances. Conversely, private sector banks disburse a disproportionately larger share of credit relative to their deposit collection. This disparity suggests underutilization of funds by public banks and over-leverage by private ones.
Furthermore, a NABARD report identifies 28 out of Bihar's 38 districts as credit deficient. Policy suggestions include a strong push for public sector banks to increase credit disbursement, potentially spurred by government infrastructure investments, and to improve their asset quality by reducing non-performing assets.
