Praxis Business School, Kolkata, India

Small and Medium Scale Enterprises Exchange

Finally, Good days are ahead for 26 million small and medium enterprises in the country. BSE’s SME Exchange is planning to start operations. The Prime Minister's Task Force has recommended to set-up a dedicated Stock Exchange/ Platform for SME. SEBI has also laid down the regulation for the governance of SME Exchange/Platform. First SME Exchange in India will be started by BSE and followed by NSE, which has started preparation for launching its own SME Exchange.

Before going in to the discussion lets have a glance about SME Exchange. An SME exchange is a stock exchange dedicated for trading the shares of small and medium scale enterprises(SMEs) who, otherwise, find it difficult to get listed in the main exchanges due to initial capital raising constraint, which is 10 crore for NSE & 3 crore for BSE to get listed in the exchange. The concept originated from the difficulties faced by SMEs in raising money from the public due to lack of visibility.

Presently Small and Medium Enterprises are contributing 8% of our GDP and providing employment for around 6 crore people. The Micro Small and Medium Enterprise (MSME) sector forms the largest generator of employment in the Indian economy.

SEBI has also created separate listing conditions and waived some existing conditions.

Companies with lower paid-up capital can raise as little as Rs 50 lakh on this new SME platform.
Easier compliance norms such as half-yearly reporting instead of quarterly for bigger firms, and the provision to migrate to the main board have been put in place.
Companies are not required to show profitability for three years, this condition may be good for present situation because of the bad economic situation and tight liquidity conditions but doesn’t work in long run.

There are many benefits of SME’s Exchange such as

Easy Access to capital
Increases awareness about the company

Once the Exchange comes to operation accessing capital for SME’s will become much easier.

2 members like this

Comment by subhodeep kumar dey on March 11, 2012 at 0:05: like !!

Comment by Sankha Ghose on March 11, 2012 at 3:54: A question. What does 'migrate to the main board' mean?

Comment by anil nandyala on March 11, 2012 at 8:54: Moving from SME exchange to BSE / NSE Exchange.

Small and Medium Scale Enterprises Exchange

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