New Delhi, Aug 25 (KNN) Concerned over rising non-performing assets, West Bengal Finance and Industries Minister Amit Mitra said that banking sector is facing serious crisis on macroeconomic front due to which MSMEs facing funding crunch.

He said credit availability to micro, small and medium enterprises is getting squeezed as many public sector banks are restrained from aggressive lending as a part of prompt corrective action framework of RBI.

As many as 11 public sector banks including 3 based in the city are operating under the prompt corrective action framework of RBI, Mitra added.

Speaking at an event of the Indian Chamber of Commerce on Friday, Mitra said "the macroeconomic scene today in banking is very very discomforting. There is a massive rise in non-performing assets. It has gone up systematically from 2014.”

Further, he added that the gross non-performing assets ratio of these banks was 21 per cent in March 2018 and is expected to go up to 22.3 per cent by March 2019.

"Macro-stress tests indicate that under the baseline scenario of the current macroeconomic outlook, the GNPA ratio of scheduled commercial banks may rise from 11.6 per cent in March 2018 to 12.2 per cent by March 2019,” Mitra added.

The system-level capital to risk-weighted assets ratio (CRAR) may come down to 12.8 per cent from 13.5 per cent during the period, the regulator has said in its financial stability report, Mitra pointed.

With high NPA and strict restrictions under the PCA framework, labor intensive SME may face the severe funding cruch, said Mitra.

He said "the SMEs are going to get squeezed. Bankers themselves are saying that it has become increasingly difficult as half the public sector banks are under PCA.

In addition to this, Mitra said that the state government will explore whether co-operative banks can play a role in credit flow to the SME sector.

Credit flow to the MSME sector in the state has surpassed the target in the last three years, according to data from the State Level Banker's Committee.

Mitra also said that the NPA levels have increased every year since 2014, rising to over 11 per cent from 4.4 per cent.

"We talk about scams but these figures show scams were in the offing. NPAs were climbing at a phenomenal rate," he said.