Home » SEBI Investigates Merchant Banks over SME IPOs.

SEBI Investigates Merchant Banks over SME IPOs.

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According to sources, SEBI is looking to enhance regulations, which may include requiring extra disclosures, audits, and oversight measures.

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The Securities and Exchange Board of India (SEBI) has launched an investigation into over 12 merchant banks due to concerns regarding their due diligence processes for initial public offerings (IPOs) of small and medium enterprises (SMEs). This investigation arises because the rules for SME IPOs are usually more relaxed than those for larger mainboard listings. This raises concerns about how effectively these companies are being monitored.

Sundararaman Ramamurthy, the CEO of BSE, advised bankers on Tuesday to ensure that companies looking to go public aren’t exaggerating their financial figures.

According to unnamed sources who were not authorized to speak about the meeting, he also urged them to make greater efforts in evaluating potential listing candidates by visiting their offices and assessing them in person.

Madhabi Puri Buch, a key figure at SEBI, addressed the potential risk of price manipulation within the SME market. She urged investors to be cautious in this high-risk area. Recently, valuations of small and mid-cap companies have surged. She warned that while some market segments are growing quickly, others appear overvalued and could burst like bubbles.

In a related development, Ashwani Bhatia, a whole-time member of SEBI, recently talked about the need for upcoming consultations. These discussions aim to address current issues and find ways to strengthen regulations further. This initiative aims to enhance transparency and protect investors in the SME IPO space.

Overall, SEBI’s actions show increasing concern about market integrity. There is a clear need for stronger oversight as market dynamics continue to change.

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