SEBI Weighs Major SME IPO Rule Changes To Expand Market Access

The Securities and Exchange Board of India (SEBI) is considering changes that could allow larger companies to list on SME platforms while making it easier for investors to trade their shares. The proposals were discussed by SEBI’s Primary Market Advisory Committee on Wednesday, with a formal consultation paper expected to follow.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Higher Valuation Limit For SME Listings

Under the proposed framework, companies with a market value of up to ₹4,000 crore could become eligible to raise funds through SME IPO platforms, according to people familiar with the matter. At present, these platforms generally cater to companies valued below ₹500 crore.

SEBI is also considering increasing the paid-up capital eligibility threshold to ₹100 crore from the existing ₹25 crore. If approved, companies valued between ₹1,000 crore and ₹4,000 crore could potentially choose between an SME platform and the mainboard.

The proposed changes would represent a significant revision to the SME listing framework introduced in 2012.
₹2 Lakh Minimum Trade Size May Be Removed

A third proposal that is being considered is that of getting rid of the minimum size requirement for trades. Presently, the minimum size for trade is ₹2 lakh, making SME stocks difficult for small investors to access.

The removal of such a requirement will give smaller investors the ability to make small purchases of stock.

Also, SEBI is studying the function of market makers. At present, market-makers are required to provide continuous buy and sell quotes for SME shares. The arrangement is intended to support liquidity but can increase costs for companies.

The regulator is considering removing the mandatory market-making requirement along with the obligation for managers to underwrite SME IPOs, according to the people cited in the report.

SME IPO Activity Has Expanded

The proposed changes come after increased regulatory scrutiny of the SME IPO market. SEBI had tightened oversight less than two years ago amid concerns around pricing practices and fraud in the segment.

India has recorded nearly 100 SME listings so far this year, compared with 267 during 2025, according to the information provided.

The cost of raising money through SME IPOs has also remained higher than on the mainboard. Data from Prime Database showed that investment bankers charged an average of 5.3% of the amount raised for SME offerings, compared with around 2.2% for mainboard IPOs.

Consultation Paper Expected

SEBI is expected to seek public feedback before finalising the proposed changes. The regulator has not yet formally announced the measures.

If implemented, the changes would give a wider group of companies access to SME exchanges while reducing some of the trading and issuance requirements currently associated with the segment. The proposals remain under consideration and could be modified before any final rules are issued.