The Securities and Exchange Board of India is evaluating proposals to broaden the SME listing route, potentially allowing companies valued up to ₹5,000 crore to raise capital on smaller exchanges, marking a significant shift in the segment’s landscape.
The Securities and Exchange Board of India is weighing a significant widening of access to its SME listing route, a shift that could allow far larger companies to raise capital on smaller exchanges before graduating to the main board. According to The Hindu BusinessLine, the regulator is considering lifting the ceiling on post-issue paid-up capital to ₹100 crore from ₹25 crore, which would open the SME platform to companies valued at as much as about ₹5,000 crore.
The proposed change would mark a notable broadening of a market segment that, until now, has largely catered to much smaller enterprises. People familiar with the discussions told The Hindu BusinessLine that the review also covers easing the ₹2 lakh minimum application size for trading lots and softening market-making and underwriting requirements. One source said the aim is to create a route for firms that are too large for the current SME framework but still face high costs and compliance burdens on the main board.
The timing of the review is notable because SEBI tightened SME IPO norms only recently. The Economic Times reported that the regulator introduced a profitability filter, requiring companies to show operating profit, or EBITDA, of at least ₹1 crore in two of the previous three financial years, and capped the offer-for-sale portion at 20%. Other industry summaries said the rule changes replaced an earlier net-worth test and were designed to ensure better-quality issuers while limiting speculative excess in the segment.
Even with those tighter standards, the SME market has remained active, though activity appears to have slowed. The Hindu BusinessLine said about 80 SMEs listed in the first half of 2026, compared with 267 in 2025. According to people quoted in the report, SEBI has seen signs of improved retail behaviour and believes a lower entry threshold could encourage broader participation, especially if companies can use the SME platform as a stepping stone to the main board. The regulator had not responded to emailed questions, The Hindu BusinessLine said.
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