SME (Small and Medium Enterprises) IPO helps small and medium businesses to raise capital. It is an important medium for these companies to grow their business. In recent years, SME IPOs have seen huge interest from retail investors, causing this segment to grow rapidly.

Why the idea of ​​increasing the investment limit?

The Securities and Exchange Board of India (SEBI) has suggested that the minimum investment limit in SME IPOs be increased from the current Rs 1 lakh to Rs 2 lakh or Rs 4 lakh.

Reason

• Investing in an SME IPO is risky.
• It is important to protect small investors from huge losses.
• Investors may suffer losses due to sharp fluctuations in share prices after listing.

Growing investor interest: What do the numbers say?

• The investor-applicant ratio in FY 2021-22 was only 4 times.
• This ratio increases to 46 times in 2022-23 and 245 times in 2023-24.
• This shows that the participation of retail investors in SME IPOs has increased rapidly.

What will be the impact on small investors?

If this proposal is implemented:

• Participation of small investors will be less.
• Only knowledgeable and risk-taking investors will be able to invest in this segment.
• Investors' confidence in SME companies will be further strengthened.

What will be the benefits for the market?

• There will be more stability in SME IPOs.
• Due to higher investment limits, investors will invest more responsibly and wisely.
• Only those investors will participate in the market who can handle the financial risk.

SEBI is seeking suggestions from the public

SEBI has sought public opinion on this issue. People can give their suggestions till December 4, 2024. This step has been taken towards making the market safer and more reliable for investors.

Is this the right step?

This change may be good for providing stability to the market, but it may deprive small investors of opportunities. Now it remains to be seen how the public and the market accept this move.