The proposed change forms part of a broader review of the SME framework
The Securities and Exchange Board of India (SEBI) is considering raising the maximum post-issue paid-up capital for companies listing on SME platforms to ₹100 crore from the current ₹25 crore, a move that could allow companies with market valuations of up to about ₹5,000 crore, nearly 10 times higher than the typical sub-₹500 crore companies currently listing on the SME platform, to tap the SME IPO route.The proposed change forms part of a broader review of the SME framework, which includes easing the minimum application size of ₹2 lakh for trading lots and easing mandates of market making and underwriting, said people familiar with the matter.“There are several companies that aren’t small enough to be eligible under the current SME framework, but still find it very difficult to meet the higher costs for listing on the mainboard platform. The changes are a carve-out for these companies to be able to list on SME, grow using the capital and move to the mainboard,” said a person aware of the discussions.Gets approvalThe proposals were discussed and approved by the Primary Market Advisory Committee on Wednesday. The regulator is expected to review the proposals internally before seeking public comments through a draft paper. SEBI is also considering removing the minimum application size of ₹2 lakh for individual investors. The regulator had doubled this requirement from ₹1 lakh less than two years ago to curb excessive speculative retail frenzy in the SME primary market. more participationSources said the regulator observed an improvement in retail behaviour last year and lowering the entry barrier would encourage more participation as the quality of SME companies also increases. “Since there is always an option to migrate to the mainboard, allowing more companies in SME would encourage more MSMEs to list,” said another source.SEBI is also looking at easing the market-making requirements for SME issues, potentially lowering the minimum number of years. Currently, companies have to appoint a designated market maker for a minimum three years from the date of listing to provide liquidity in the stock on the platform.Further, the regulator may also ease the mandatory requirement of underwriting the full SME IPO issue size, including by merchant bankers to show skin-in-the-game.E-mail queries sent to SEBI did not elicit a response. The discussions to ease SME regulations follow industry feedback about the increased difficulties in listing on the SME platform following the series of tightening enforced by the market regulator less than two years ago. Data showed that around 80 SMEs have listed in the first half of 2026, compared to 267 in 2025.Published on August 13, 2026
