SME Listing: SEBI To Release Consultation Paper On Process Soon
SEBI whole-time member Ashwani Bhatia suggested that SMEs opt for angel or venture funds as initial options before considering an IPO.
The market regulator is expected to release a consultation paper on the listing process of small and medium-sized enterprises soon, said Ashwani Bhatia, a whole-time member of the Securities and Exchange Board of India, on Monday.
The paper will tinker with regulatory adjustments affecting exchanges, merchant bankers, and other related entities involved in SME listings, he said in an off-camera common media conversation after the event.
While speaking at the Financing 3.0 Summit, he mentioned that SMEs contribute 62% of employment and 30% of the country’s GDP.
He also pointed out that SME platforms, operational since 2012, provide an alternative funding avenue and have seen a significant increase in both issues and investor participation.
Bhatia further mentioned that IPO listings on SME platforms have quadrupled over the past five years, and funds raised through these IPOs have grown 12-fold during the same period.
Many SMEs have transitioned to main board listings, with 600 now listed on the Bombay Stock Exchange and the National Stock Exchange. Currently, there are about 2 lakh IPOs, he said.
However, he also raised concerns about the lack of checks and balances in the SME listing process. He emphasised that diligence from chartered accountants, merchant bankers, and exchanges is often insufficient, and shortcuts and inflated valuations could harm long-term relationships. He urged intermediaries to avoid shortcuts and ensure thorough evaluations to support the SME system effectively.
Bhatia also noted India’s impressive startup ecosystem, which ranks third globally with 12–15% annual growth. The country is home to five techcons and over 110 unicorns valued at $350 billion.
Government initiatives such as fund of funds and seed funds, along with the rise of digital payments and UPI, are further boosting economic growth and credit flow.
Bhatia emphasised that data and analytics are crucial for assessing SME creditworthiness and suggested that angel or venture funds might be more suitable initial options before considering an IPO.
