This refers to your edit A welcome move- Easier Listing for SMEs (ET Dt 21/05/10). While the measures relaxing the norms for listing of SMEs by the SEBI are welcome and encouraging, it would not be sufficient to give a boost to our SMES which have a great potential to support our economy in term of GDP growth, exports, employment and. distribution of wealth. SMEs deserve a special exchange to take care of their capital requirements, financial discipline, growth and contribution to the economy.
An exclusive exchange will help the investing public particularly retail investors As it is, retail investors keep themselves away from capital market as allotment through IPOs is uncertain to all applicants and operating through secondary market is costly,risky and often unaffordable. Volatilty is vey high these days in the capital market and it is risky for retail investors to operate in capital market. In case a separate stock exchange is created for SMEs the involvement of retailers will be very high and capital formation will be easier. Allocation to institutions like banks ,mutual funds and other investors can be earmarked keeping a larger portion for retail investors .Such an arrangement will give a boost to the SME sector .
Dr T.V.Gopalakrishnan
(An edited version of this appeared in Economic Times dt 24.05/10)
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