Market regulator SEBI is planning to launch a new platform that will enable investors to put in money in SMEs, a senior offficial said on Monday.
“We are working on a new platform for small companies... A platform for people or investors who are willing to invest in SMEs will be launched soon,” SEBI Executive Director S. Ramann said in Mumbai while addressing a seminar on the ‘Potency of capital markets for SMEs’ organised by the BSE.
He, however, declined to give any time frame for the launch of this separate platform.
In this year’s Budget, Finance Minister P. Chidambaram had said SMEs, including start-ups, will be permitted to list on SME exchanges without being required to make an initial public offer (IPO), but the issue will be restricted to informed investors.
He had also said that this would be in addition to the existing SME platforms which BSE and NSE had launched in which listing can be done through an IPO and with wider investor participation. Under the existing platforms, small companies can go public without filing with the SEBI.
Mr. Ramann also said the proposed platform can be part of SME exchanges in which informed investors can put their money into these entities.
He also pointed out that as there were chances of SME companies facing winding up, interests of retail investors have to be protected.
Referring to financing of SMEs, Mr. Ramann said bank funding remained the predominant source of financing for the sector, adding that they have to look for innovative sources of financing to attract capital.
As per the SEBI official, SME sector is one of the largest employment generating sectors employing around 8 crore people.