Lowering standards for SME listing not on: Sebi

Govt initiates talks to revive OTCEI

 Efforts to dilute norms will increase disclosure and governance risks. Instead of dilution, which creates arbitrage and triggers tendency to exploit inconsistencies in regulations, efforts should be to create market designs that will ensure liquidity for SMEs to raise funds, Pratip Kar, executive director of Sebi, said while addressing a seminar on capital market access for SMEs, here today.

 Indian investors' experience with SMEs raising funds through public offers in the mid 1990's is bitter as many companies vanished after raising funds from the market.

 Earlier, K P Krishnan, the joint secretary in the Union finance ministry, had highlighted the need to ease the listing requirements so SMEs do not face difficulty in fund raising. Designing a system for small businesses to make disclosures without incurring high costs that go with regulatory compliance, was also needed, Krishnan said in his presentation.

 As a step to find platforms for SMEs to raise market capital, the government has begun talks with original promoters of the now defunct, Over the Counter Exchange of India (OTCEI), to revive it, Krishnan said.

 Indonext platform, an initiative of Bombay Stock Exchange (BSE) to provide trading platform for scrips listed on the regional stock exchanges, has not succeeded either.

 Any effort to promote a separate trading platform for SMEs will need huge amount of efforts for marketing and regulatory arrangements, Kar said.