Market regulator Sebi advises exchanges to be more discerning on SME IPOs | News on Markets


Ashwani Bhatia whole-time member, Sebi

Ashwani Bhatia whole-time member, Sebi


Exchanges and market ecosystem should learn to say ‘no’ when it comes to listings of small and medium enterprises (SMEs), said Ashwani Bhatia, a whole-time member of the Securities and Exchange Board of India (Sebi), amid concerns of manipulation and fraudulent practices in the sector.


His comments come at a time when the market capitalisation of SMEs has surged to Rs 2 trillion and the segment sees heightened investor frenzy for subscriptions during Initial Public Offerings (IPOs).


Bhatia highlighted the lack of due diligence from auditors and market ecosystems, leading to inadequate checks and balances.


“Nobody is saying no to SME listings, even when they inflate their balance sheets. The auditors should be good doctors —don’t give them steroids when they can survive on paracetamol,” he said at the Financing 3.0 Summit in Mumbai.


Bhatia urged SMEs to explore other funding opportunities through alternative funds before exploring listing.


“Instead of coming straight to IPO, a better way is to go to angel investors. Grow there for a while and then come to the exchanges,” he suggested.


The commitments from  Sebi-registered alternative investment funds (AIFs) have surged to Rs 1,169 crore for SME financing as of March, with Rs 735 crore already raised.


At the same event organised by the Confederation of Indian Industry (CII), Ashishkumar Chauhan, MD & CEO of the National Stock Exchange (NSE), said the exchanges have taken cognisance of the issues in SME listings.


“We will maintain the balance, and a stricter guideline is expected. Not all SMEs are doing good,” said Chauhan.


The market regulator has of late adopted a stricter approach towards surveillance of SMEs and issued orders against firms found using the route to allegedly siphon off funds, inflate prices through fictitious transactions, or towards promoters using the avenue to offload stakes.

First Published: Sep 02 2024 | 5:23 PM IST



Source link

Latest articles

Related articles

Discover more from Technology Tangle

Subscribe now to keep reading and get access to the full archive.

Continue reading

0