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SEBI proposed to increase the minimum investment limit for applying for SME (Small and Medium Enterprises) IPO to Rs 4 lakh. The objective is to ensure that only investors with adequate risk appetite and investment capacity can apply. This step has been taken following the sharp increase in SME issuance.
New Delhi. Market regulator SEBI proposed to increase the minimum investment limit for applying for SME (Small and Medium Enterprises) IPO to Rs 4 lakh. The objective is to ensure that only investors with adequate risk appetite and investment capacity can apply. This step has been taken following the sharp increase in SME issuance. There has been significant participation from investors in these issues. With the increase in SME issuances, investor participation in such offerings has also increased significantly.
The investor-applicant ratio allotted was four times in FY 2021-22, it has increased to 46 times in FY 2022-23 and 245 times in FY 2023-24. SEBI said in its consultation paper, “The participation of retail investors in SME IPOs has increased in the last few years. SME IPOs are high risk and run the risk of getting stranded if sentiment changes after listing. In view of this, it is proposed to increase the minimum application size in SME IPO from Rs 1 lakh to Rs 2 lakh to protect the interests of small retail investors.
This will ensure that only investors with risk appetite and knowledge apply for SME IPOs. Higher investment limit will reduce participation of small investors and attract investors with risk appetite. This will increase confidence in the SME segment. Another proposal has suggested increasing the investment limit from Rs 1 lakh to Rs 4 lakh per application. The Securities and Exchange Board of India (SEBI) has asked people to give suggestions in this regard by December 4.
Disclaimer: Prabhasakshi has not edited this news. This news has been published from PTI-language feed.
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