India’s exchanges and markets regulator is planning to tighten rules for public offers of small and medium enterprises (SMEs) in response to complaints about the misuse of a separate listing platform that was created in 2012 to assist small businesses in accessing capital markets.

The Securities and Exchange Board of India (SEBI), the regulatory agency, is considering raising the minimum amount of these public offers to 300 million–500 million Indian rupees ($3.59 million–$5.99 million), according to the two persons who are fully aware of the conversations.

They state that the exchanges and regulators would discuss this with stakeholders before releasing the news regulations later this year.

Businesses that are listed on the platform must have a post-issue capital base of at least 250 million rupees, even though there isn’t yet a minimum issue size requirement.

The thriving Indian equity markets helped 205 SMEs finance 60 billion rupees through public issues in the fiscal year ending in March 2024, according to PRIME Database, a repository of capital markets data. The previous year, 125 enterprises had raised 22 billion rupees.

Companies that generate between 50 million and 2.5 billion rupees annually are called small and medium-sized enterprises (SMEs) in India.

There were concerns over possible platform misuse as some of these issues had between 500 and 1000 subscribers, according to the sources.

In addition to being subject to a minimum issue size, these corporations will reportedly be expected to furnish supplementary disclosures.

The chairperson of SEBI, Madhabi Puri Buch, stated earlier this year that certain bankers and issuers were exploiting the system designed for SME listing. Buch responded by saying that SEBI is obtaining evidence of the alleged pricing manipulation in the segment.

Due to claims of financial mismanagement resulting from initial public offerings, SEBI last week barred three SMEs from accessing the capital markets. These companies allegedly used capital for reasons other than those indicated, changed financial statements, and misrepresented information in offer documents, all according to the SEC.