The Securities and Exchange Board of India will be introducing more measures to help the small and medium enterprises (SME) sector in raising finances, Chairman U. K. Sinha said here on Wednesday.
Earlier initiatives for SMEs in 2003 and 2009 were not successful, but a new set of measures taken in early 2012 had borne fruit. In a span of two years, 71 companies got listed on the SME platform and raised finances of about Rs.600 crore, said Mr. Sinha while inaugurating CAPAM 2014, organised here by the Federation of Indian Chambers of Commerce and Industry (FICCI).
By a thumb rule, the market capital of these companies was Rs.2,500–Rs.3,000 crore.
“To my mind, while the promoters are willing to put in money, their full potential is not being realised whether it is sales or profit growth because they have a serious problem in raising finances when they need it. Keeping this in mind, SEBI came out with a set of regulations about an SME platform,” he explained. Mr. Sinha also noted that there was a hugely optimistic mood in the country as compared to the sentiment during last year’s conference. The lowest figure of growth projection is now 5.5 per cent with World Bank and IMF figures of 5.6 per cent. This is despite forecasts of a mediocre global growth rate.
“Look at our markets. In one year, the returns are about 30 per cent. FII flows during the current year have been around $34 billion; and in the financial year clearly it has been about $25 billion. Going by the trend, I wouldn’t be surprised if we end the current year by an all time record number. This is a remarkable thing for our country to have achieved in less than one year,” he added.
H. R. Khan, Deputy Governor, RBI, said India’s development plans needed to be financed with long-term capital.
According to him, currently the investment regime is complex and multifaceted. There are push and pull factors in the market. India’s market size, the openness of its economy and its growth prospects are huge pull factors. The push factors include global liquidity.
While addressing a session on ‘Real Estate and Infrastructure Financing’, R. Gandhi, Deputy Governor, RBI, said “we do recognise that real estate has lot of linkages for the growth of the economy, but it has its own potential to create asset bubbles, and because of that we need to be extra careful in supporting this segment.” He further stated that real estate is therefore treated as a sensitive sector and is closely monitored by the RBI.
