SMEs Are the Backbone Of the Indian Economy: Ajay Thakur, CEO of BSE SME Exchange Thakur spoke about the increasing awareness among SMEs about the benefits of getting registered with the stock exchanges
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"India's GDP has surpassed the $4-trillion mark for the first time and the capital markets are also giving a glimpse of that," said Ajay Thakur, CEO, BSE SME Exchange, while delivering a keynote address at Entrepreneur India's E Live x India Investment Forum 2023 in Mumbai last month.
He also said that around 10 crore investors have invested in capital markets so far. "In 2020, we had almost 2.5 crore investors registered with the stock exchanges. Now, we have touched 10 crores and very soon, we will be reaching 12 crores."
Indian capital market has become resilient and we have sufficient funds in the hands of retail investors and mutual funds which are balancing the capital markets. Thakur spoke about how SMEs (small and medium enterprises) are the backbone of the Indian economy and that's why around 12 years back they a platform for SMEs. "To keep the economy sustainable, SMEs should keep growing, should keep prospering. During the COVID period, we saw that SMEs were in bad shape. However, post that, we have seen lots of SMEs getting themselves registered, raising funds and their valuations also kept going up," he said.
He believes that the reason behind this is that in 2010 when the guidelines came up, it was kept simple to encourage more and more enterprises to get registered on the SME platform. Guidelines were such that any company whose paid-up capital was below 25 crores could get registered on that new platform. "We kept simple eligibility criteria very simple. Besides, compliances were also kept minimal. So this way we ensure more and more SMEs can get registered," he said.
In the last 12 years, Thakur has met more than 22,000 SMEs. Initially, it was very difficult for him to convince them to get registered. So, Thakur traveled across the country to address the fear of compliance. "Most of them fear that they might have to move around the compliance office. I had to convince them that this is a digital platform for wealth creation and they can raise funds without the liability of servicing it," he recalled.
And, this is how Thakur and his team got many of them registered. Today, around 463 SMEs are registered on BSE and around 350 SMEs on NSE. Together they have raised around 11000 to 12000 crores from the primary market and have a total market cap of around 1.7 lakh.
The awareness has further raised in the last few years. "We have seen that the awareness has increased substantially. Last year, we saw around 120 SMEs get registered, which was the largest in 5 to 7 years. This year, we have already crossed 150 and we expect more."
Ajay Thakur also shared the following benefits SMEs can reap from registering with the stock exchanges.
- This way, one can dilute 25 per cent equity and raise funds. And, this is different from bank funding where one has to repay the loan. Here equity holders are like partners. So, one can focus on expanding the business.
- Second, the balance sheets are very healthy.
- Because of listing, the credibility of promoters increases a lot. There is more transparency, thereby more trust.
- Once you list, your valuation starts unfolding. The potential, vision and profits come into the place.
- Lastly, if you don't want to dilute your equity, you can use it as collateral and go to the banks and financial institutions.