SEBI Reviews LODR Norms, Proposes Dedicated SME Compliance Portal

India’s capital markets regulator, Securities and Exchange Board of India (SEBI) is preparing to launch a dedicated digital portal for Small and Medium Enterprises (SMEs). It is a move to simplify compliance norms and widen access to market funding.

Speaking at the India SME Finance & Investment Summit, SEBI Chairman Tuhin Kanta Pandey said the regulator is also reviewing the Listing Obligations and Disclosure Requirements (LODR) framework to remove redundancy and ambiguity. The review will also cover SME-specific compliance rules. The aim, he said, is to improve ease of doing business without diluting investor protection.

SME Listings Gather Pace

Note that more than 1,400 SMEs are currently listed on the NSE and BSE platforms. Their combined market capitalisation stands at around ₹4.1 trillion. Over 350 SMEs have migrated to the mainboard so far. This migration track record is often cited as proof that the SME segment can act as a launchpad for larger capital market participation.

Fund-raising activity has remained strong. Notably,

• In FY25, 241 SME IPOs raised ₹98 billion

• In FY26, up to January 31, 232 SME IPOs have already mobilised ₹105 billion

The pace of fundraising in FY26 has already crossed last year’s total in value terms, even before the fiscal year closes. This underlines sustained investor appetite for smaller public issues despite broader market volatility.

Tighter Due Diligence By Exchanges

Stock exchanges have also stepped up oversight in the SME segment. According to Pandey, exchanges have tightened due diligence standards and increased engagement with promoters and merchant bankers. They have conducted site visits. They have also deployed artificial intelligence tools to process Draft Red Herring Prospectuses (DRHPs) quickly.

The measures are aimed at improving issuer quality and protecting investors. The SME segment has seen strong retail participation in recent years, prompting regulators and exchanges to increase scrutiny.

Working On Corporate Bond Market

Alongside equity markets, SEBI is working to deepen the corporate bond market. Pandey said the regulator plans to conduct pan-India awareness programmes to encourage SMEs to tap market-based debt, in addition to equity financing.

This is notable as only one SME has raised debt through the exchange platform in the current fiscal year so far. The low number suggests that equity continues to dominate fundraising among smaller companies.

Impact On The SME Sector

The proposed SME portal and LODR review could reduce procedural hurdles for smaller issuers at a time when IPO activity remains strong. A simplified compliance framework may bring more first-time issuers to the market, especially from regions that have seen limited participation so far.

For investors, tighter due diligence and clearer disclosure norms may improve confidence in SME offerings. If access to both equity and bond markets improves, the SME platform could see broader participation, deeper liquidity and a larger pipeline of companies graduating to the Main Board, shaping the next phase of growth in the overall SME space.

Sources:

Moneycontrol

The Hindu Business Line

New Indian Express