New Delhi: Finance Minister P Chidambaram on Tuesday asked public sector banks and rating agencies to handhold small and medium enterprises (SMEs) to enable them tap the capital market for raising funds.
He was speaking after launching the dedicated SME platform 'Emerge' of National Stock Exchange (NSE).
Currently seven companies are listed on the SME platform of BSE and one company (Thejo Engineering) got listed on NSE platform today.
Stating that tapping the capital market is one of the ways for SMEs to grow, the Finance Minister said there are entrepreneurs who are willing to come to the market.
"...Small merchant bankers, public sector banks, rating agencies, ...All of them have to make that extra effort, take that extra step to handhold a large number of (small and medium) companies to come to the market," he said.
In the past attempts to bring them to market had failed.
The banks and other entities can help SMEs through underwriting of the issues, providing merchant banking services and picking up equity.
The minister said "it is not easy to bring SMEs into the market" due to reasons such as regulations of Sebi and other regulators scaring away small entrepreneurs.
"But I think the opportunities for the micro, small and medium enterprises to raise capital and to grow and to expand are so large that we must get over these obstacles and try to see that those who have the entrepreneurial quality are able to raise capital and grow," the Finance Minister said.
About 3.11 crore SMEs contribute 45 percent to industrial output and 8 percent to the GDP.
Sebi Chairman U K Sinha said the market regulator and the government should take into account not only the requirements of corporates and entrepreneurs to raise money but also ensure safety of the money invested by people.
Chidambaram said while in the past attempts to bring SMEs into the market to raise funds failed, one should not worry about those failures and take encouragement from the fact that entrepreneurs are willing to come to the market.
"I think its important that we send a message that we want SMEs to grow out of their small and medium size. More will enter as small and medium but the successful small and medium must indeed become medium and large," he added.
Congratulating Thejo for its "bold step" to get listed, Chidambaram said "this example must be followed by thousands of companies".
The Finance Minister also lamented that in India "we have encouraged people to believe that a micro (enterprise) must remain micro, small must remain small and medium must remain medium".
"In fact whole series of regulations and rules are written to ensure that they remain micro, small and medium and no one actually grow", he added.