Sundararaman Ramamurthy, the CEO of BSE Ltd., has instructed bankers to enhance their oversight of SME initial public offerings (IPOs), following concerns about inflated financial figures in recent applications. According to sources familiar with the situation, Ramamurthy emphasized the need for bankers to carefully vet IPO hopefuls and conduct in-person assessments of company premises.
This initiative aims to raise standards in India’s rapidly expanding SME IPO market, which has drawn increased retail investment but also raised concerns among regulators. In August, India’s market regulator warned investors about potential misrepresentations by certain SMEs and their majority stakeholders.
While BSE Ltd. and the National Stock Exchange (NSE) offer listing platforms for small companies, the demand for these listings has surged, with some IPOs being oversubscribed by up to 400 times. As a result, tighter scrutiny and more robust due diligence are being encouraged to safeguard market integrity.
Earlier reports by Bloomberg News indicated that India’s securities regulator may also be considering additional oversight of micro-cap companies, potentially introducing measures such as monitoring the use of IPO proceeds and enforcing stricter guidelines for bankers handling these deals.