Pitching for a regulatory mechanism that would help micro units to graduate to small and to medium enterprises, Finance Minister P. Chidambaram, on Tuesday, directed public sector banks (PSBs) and rating agencies to guide small and medium enterprises (SMEs) and help them in tapping the capital market.

Speaking after launching the dedicated SME platform ‘Emerge’ of National Stock Exchange (NSE) here, Mr. Chidambaram regretted the tone and tenor of regulations which do not encourage the enterprises to grow in size. “We have encouraged people to believe that a micro [enterprise] must remain micro, small must remain small and medium must remain medium…In fact, whole series of regulations and rules are written to ensure that they remain micro, small and medium and no one actually grows,” he said.

With seven companies now listed on the SME platform of the Bombay Stock Exchange and the NSE starting its count with the listing of one company, Thejo Engineering, on the ‘Emerge’ platform, Mr. Chidambaram pointed out that tapping the capital market for raising funds was one of the ways for SMEs to grow. Mr. Chidambaram felt that banks and other market-related entities could help SMEs to tap the market by way of underwriting issues, providing merchant banking services and picking up equity stakes in their ventures.

Even as SEBI Chairman U. K. Sinha maintained that the market regulator as well as the government should take into account not only the requirements of corporates and entrepreneurs to raise money but also the safety of the money invested by people, Mr. Chidambaram said one should take encouragement from entrepreneurs willing to come to the market instead of looking at past failures.