These 21 banks, including Axis Bank and ICICI Bank, have scored qualification marks of 25 points out of 100 fixed by the state government, he said.
The points are meant to assess their performance in lending on criteria like credit-deposit ratio, primary sector lending, agriculture sector lending and kisan credit card, Modi told reporters at the sidelines of his weekly 'Janata Durbar'.
As many as 13 banks scored zero, while the rest scored between 7 and 23 and failed to meet the state government's requirement on lending by the banking institutions to the borrowers in Bihar in 2011-12, he said.
The state government had, therefore, decided against making deposits in these 21 banks till further orders and also to withdraw its funds from these banks, Modi, who also holds the finance portfolio, said.
The Deputy Chief Minister said the performance of banking institutions were assessed after an agreement with state-level bankers committee for reviewing their lending performance in respect of the four criteria of the state government with effect from April 2012.
Modi at the same time lauded some banks, like IndusInd Bank, Samastipur Kshetriya Grameen Bank, HDFC, Canara Bank, Union Bank of India, State Bank of India, Punjab National Bank and Bank of Baroda, for making borrowings available to the people on the four-point criteria.
He said some banks were making excuses against providing loans for development purposes despite the state government's impressive debt repayment track record.