Bihar Government has decided to change its parameters to monitor the performance of the banks operating in the state. It has decided to include advances given to Self Help Group (SHG) and Education Loans in this parameter.
The state government began cracking hard on the non performing banks since the beginning of this fiscal. To monitor the performance of the banks, the state government devised a four point parameter, which includes advances in the priority and agriculture sector, Kishan Credit Card (KCC) and Cash Deposit Ratio (CDR). In August last year, the state government suspended deposits in 21 banks for their poor performance.
"We have no authority over banks," Deputy Chief Minister Sushil Kumar Modi told Business Standard, "Our deposits are the biggest weapon for us and now we have decided to use it to reprimand the non performing banks. It is now showing its effects and banks are now enhancing their performance."
The state government is now planning to add two more points in its parameter. It has decided to include advances given to Self Help Group (SHG) and Education Loans in the monitoring process. Modi said, "We are now planning to expand the parameter and includes two new points in it. The first will the advances to SHGs, which are now playing a big role in providing self employment to the people. Therefore they have become very crucial for the growth of the state. Most of them still need financial help from banks to grow." He stated, "Secondly, we are focusing of education loans. Today thousands of children are going to other states to get better technical education, which costs very dearly. Therefore they also need banks financial backing."
The state government is also planning to keep a close eye on the performance of the banks. Therefore it has decided to review their performance on the district level. Modi said, "We have directed each and every district administration to keep an eye on the performance of the banks. They have also been directed to keep more money in those banks, which are giving more advances to the people locally and vice versa."