SME IPO market faces a credibility test

India’s small and medium enterprise (SME) IPO market has become one of the busiest corners of Dalal Street, minting riches for some but sparking concerns over risks to small investors.

- Neha Joshi

India’s small and medium enterprise (SME) IPO market has become one of the busiest corners of Dalal Street, minting riches for some but sparking concerns over risks to small investors.

In a conversation with Mint, Sundaraman Ramamurthy, managing director (MD) and chief executive officer (CEO) of BSE Ltd, warned that the market is no place for uninformed retail investors.

While the SME platform has helped more than 1,200 companies raise over ₹30,000 crore, governance concerns and investor protection are prompting calls for tighter regulations.

“SME issuances are meant for informed investors and not suited for uninformed retail investors who may have only limited or no awareness about research, due diligence capabilities, and risk appetite,” Ramamurthy said.

He suggested that retail investors at the beginning of their journey would be better served by lower-risk products like large-cap or index funds, ideally through a systematic investment plan (SIP).

BSE has urged the Securities and Exchange Board of India (Sebi) to plug disclosure gaps, curb fund misuse, and untangle opaque deals between promoters and merchant bankers.