The Hindu Business Line : SEBI to conclude talks for SME exchange by May-end

Framing guidelines: Dr C. Rangarajan, (left) Chairman, Economic Advisory Council to Prime Minister, and Mr C.B. Bhave, Chairman, SEBI, at the 6th international conference on “SME Financing, Better Banking Regulations and Intergration of SME” held in Mumbai on Saturday. —

Our Bureau

Mumbai, May 3 The Securities and Exchange Board of India will conclude the consultation process for a separate SME Exchange by end May and then present the draft before the SEBI Board for final clearance, said Mr C.B. Bhave, Chairman, SEBI.

The markets regulator does not want any further delay in the framing of guidelines for setting up a separate SME exchange, said Mr Bhave, addressing a conference organised by the Small and Medium Business Development Chamber of India, here on Saturday.

The SEBI Board has already given the go-ahead for creation of a separate SME exchange.

“SEBI is looking at the question of the setting up of SME exchange as a facilitator, we are at present in the process of consultation with the different segments of the market who will be affected by the setting up of an SME exchange,” said Mr Bhave.

“We will close this consultative process some time around the end of May, and then take the matter to our own board for final clearance,” Mr Bhave said.

Rangarajan’s plea

The Chairman of the Economic Advisory Council to the Prime Minister, Dr C. Rangarajan, too requested the SEBI Chairman for speedy implementation of the process for setting up SME Exchange in his address at the conference. “We should also explore the possibility of developing the corporate bond market for the medium and small enterprises,” said Dr Rangarajan while admitting that the corporate bond market in the country was still not well developed.

Mr Bhave said the concept of nominating advisors for SME companies as well as a minimum ticket size for transactions on the exchange were under consideration.

“About 5-10 investment bankers with sufficiently good reputation could act as nominated advisors, and only they can raise money from the public,” Mr Bhave said.

A minimum ticket size for transactions on the SME exchange would ensure that only high networth individuals were eligible, so that uninformed investors don’t burn their fingers, he said.

SEBI is also looking at ways to reduce cost of transactions for small and medium enterprises, including the cost of regulatory compliance, but that will be done keeping investor interest in mind, he said.

The regulator will not relax any requirements on financial information for companies, as requirements of big and small investors were the same, he said.

BSE had earlier launched a separate trading platform `IndoNext’ for SMEs , but that did not receive a good response.

Responding to the fresh initiative taken by the regulator, NSE, BSE and some financial institutions have also expressed their interest in setting up an SME exchange.

Drop in INFLATION likely

Inflation is likely to come down to the 6 per cent level in the next three months as a result of the monetary and fiscal measures initiated by the Government as well as due to improved food prospects and expectations of a reasonably good monsoon, said Dr Rangarajan. “I think over the next three months it could come down from the 7 per cent to 6 per cent level and later to a much lower figure but it will certainly remain at about 6 per cent or so for the next three months,” he said.

“I think it would be unwise to expect the inflation rate to fall to 5.5 per cent tomorrow because these measures take their own time,” he added.

Replying to a question on whether it was possible to maintain high growth in a scenario of high inflation and high interest rates, he said, “I think it’s possible, the economy will grow between 8 and 8.5 per cent.”

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