The Bombay Stock Exchange (BSE) has informed the government that it intends to start a separate stock exchange for small and medium enterprises (SMEs) by September.
"The BSE CEO has recently met me and said that by September we intend to launch the SME Exchange," Secretary in the Micro, Small and Medium Enterprises (MSME) Ministry Uday Kumar Verma told PTI.
He said that both BSE and the National Stock Exchange (NSE) have been working on the plans to set up dedicated SME stock exchanges.
The market regulator, Securities and Exchange Board of India (Sebi), has already given permission for the same. "Sebi has made certain concessions like reducing the price [fee] and regulatory requirements."
According to the plan being implemented by BSE, the SMEs which are already listed on the regular stock exchange will be able to shift to the new trading platform.
Verma said that many of the SMEs find listing on the regular bourses an expensive affair in terms of fee etc.
Besides, the requirements of filing the documents like the quarterly balance sheets place regulatory burden on small firms.
All these sectors act as a deterrent for them to raise financial resources.
In the new exchange, the regulatory requirement would be far less.
The MSME Secretary agreed however that in the past the concept of dedicated exchange for the SMEs did not work.
The MSME sector, which contributes eight per cent to the country's gross domestic product and 45% of the manufacturing, has been starved of credit.
The opening of the dedicated stock exchanges will fire the aspirations of 26 million units in the sector, Verma said.