The SME platforms of NSE and BSE expanded rapidly in recent years. Following concerns about the quality of some issues, SEBI amended the ICDR Regulations in March 2025.
The principal changes
- Issuers must report operating profit (EBITDA) of at least ₹1 crore in two of the three preceding financial years.
- The offer for sale is capped at 20% of the issue, and no shareholder may offer more than 50% of their holding.
- Issue proceeds may not be used to repay loans from promoters, the promoter group or related parties.
- The draft offer document is open for public comment for 21 days.
- The minimum application size has been raised to two lots.
Our view
The SME route now favours profitable, growing companies raising fresh capital. It is no longer a quick route to promoter liquidity. For well-run companies, it remains an effective step towards the main board.