MUMBAI: In a move aimed at easing capital market access for small and medium enterprises, the Securities and Exchange Board of India (Sebi) is planning a dedicated portal to simplify compliance norms for SME issuers.
Addressing an SME summit here Wednesday, Sebi chairman Tuhin Kanta Pandey said the regulator is reviewing the listing obligations and disclosure requirements (LODR) framework to eliminate redundancy and ambiguity, while also examining SME-specific compliance requirements to enhance the ease of doing business without compromising investor protection.
"Sebi, in coordination with stock exchanges and key stakeholders, is working towards a dedicated SME portal--a one-stop digital gateway with issuer information and clearly mapped compliance guidance. This initiative will enhance transparency and simplify regulatory processes for issuers," Pandey said.
It may be noted that the government and the RBI have also been pushing credit access to small businesses, with the former announcing a Rs 10,000-crore dedicated growth fund for them in the budget 2027, while the latter is set to double collateral-free loans to MSMEs to Rs 20 lakh. The new fund as well the loan facility will be effective from the next fiscal.
MSMEs play a key role in the economy, contributing 30% of the GDP while their share in exports is over 40% and they are the biggest employers.
The Sebi chief further said listing brings governance upgrade, strengthens investor confidence, and can lower the cost of capital over time.
Sebi, in coordination with stock exchanges and stakeholders, is working on a one-stop SME portal that will provide issuer information and clearly mapped compliance guidance. The regulator also plans to open local offices in state capitals in a phased manner to improve access to listing and post-listing processes for SMEs, he added.
Currently over 1,400 SMEs are listed on NSE and BSE platforms, with a combined market capitalisation of around Rs 4.1 trillion. Over 350 SMEs have migrated to the main board, highlighting the platform’s role as a growth escalator.
In FY25, 241 SME issues raised Rs 98,000 crore, while in FY26 up to January 31, 232 SMEs have already mobilised Rs 1.05 trillion. One SME has also raised debt through the stock exchange platform this fiscal year.
Despite the growth, it is noted that SME market participation remains regionally concentrated. The Western region accounts for 44% of their IPOs this financial year, followed by the North (32%), East (14%) and South (10%), highlighting the need for deeper outreach beyond traditional centres.
Pandey said listing on a stock exchange can be transformative for SMEs, enabling them to raise long-term growth capital, reduce dependence on banks, and establish transparent, market-based valuations. It also creates a platform for future fund-raising.
He further noted that listing brings a governance upgrade, strengthens investor confidence and can lower the cost of capital over time. It also enhances brand visibility and credibility with customers, suppliers and lenders. At a systemic level, greater SME participation diversifies financing channels, reduces concentration risk in banks and frees up banking capacity for core lending.
However, he acknowledged that the SME market remains under-scaled. Many SMEs hesitate due to unfamiliarity with capital markets, limited access to credible intermediaries and the perceived high cost of IPOs. Procedural complexities and compliance requirements are often seen as burdensome, especially for companies with evolving governance systems.
Pandey also referred to past instances where certain SMEs misused regulatory relaxations, including diversion of issue proceeds and unfair trade practices, which dented investor confidence. In response, SEBI strengthened the SME framework to ensure only companies with soundtrack records access public markets.
Stock exchanges have also tightened due diligence, increased engagement with promoters and merchant bankers, conducted site visits, and deployed AI tools to process IPO papers faster—all aimed at improving issuer quality and safeguarding investors.
Pandey further said the regulator is also working to deepen the corporate bond market and plans pan-India awareness programmes to encourage SMEs to tap market-based debt alongside equity financing.