SME Stock Exchanges will foster innovation: FISME

FISME’s Secretary General Mr Anil Bharadwaj was invited to write for the prestigious business daily The Economic Times on the subject of the proposed stock exchange for small and medium enterprises (SMEs).  He argued that the proposed bourse would help SMEs to grow and innovate.

The SG wrote: “During start-up, almost all SME entrepreneurs bring in their personal savings as equity to raise debt from banks. This route fails most of them during expansion and growth. Without additional equity, needed debt funds cannot be raised through banks. Absence of an institutional mechanism for raising equity and a market-based mechanism for unlocking value of investment shuts the door on venture capitalists (VCs) and private equity (PE) players also.  The idea of SME exchanges promises to address these concerns. Not only does it help raise equity but also provide the much-needed exit route to VCs and PE players. An SME exchange, to that extent, is a load bearing beam in the financial architecture that supports scaling-up, expansion and innovation of SMEs. SEBI has allowed NSE and the BSE to set up SME exchanges. The basic criteria of listing on the exchange are: minimum 50 investors and post initial public offer (IPO) paid-up capital to range between Rs 25 lakh and Rs 25 crore….”.

Read the full article.