On 14 October 2026 the Securities and Exchange Board of India published a consultation paper titled "Consultation Paper on Recommendations pursuant to Review of provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 related to Initial Public Offer by Small and Medium Enterprises". It is a proposal, open for public comment until 4 November 2026. Nothing in it applies to any SME IPO open today.
SEBI says the proposals reflect the recommendations of a Working Group it set up for the review, deliberations of its Primary Market Advisory Committee, and "subsequent internal deliberations" (SEBI consultation paper, 14 October 2026, section 2). The paper puts the scale of the segment at 1,496 entities listed on SME platforms since inception, 365 of them migrated to the main board, and Rs 40,222 crore raised through SME IPOs, as of 31 July 2026, citing NSE and BSE.
- Minimum application
Today: Rs 2 lakhRs 1 lakh (4 lots of Rs 25,000+) - Who lists on SME
Today: Paid-up capital testMarket cap up to Rs 1,000 cr (optional to Rs 4,000 cr) - Minimum allottees
Today: 200500 - Trading lot after listing
Today: IPO lot size1 share - Market making
Today: CompulsoryRemoved - Underwriting
Today: 100% of issueMain board rules
What the paper proposes, in its own terms:
- Smaller minimum bid. The minimum application value would fall from Rs 2 lakh today to Rs 1 lakh. The Working Group suggested two lots of Rs 50,000; SEBI's internal review went further, to lots of at least Rs 25,000, so "an investor would be required to apply for a minimum of four lots" (section 5.5.1.6.1).
- Eligibility by market value, not paid-up capital. An issuer with post-issue market capitalisation up to Rs 1,000 crore would have to use the SME platform; one between Rs 1,000 crore and Rs 4,000 crore could choose it; above Rs 4,000 crore it would have to go to the main board (section 5.1.1.3).
- Higher profit bar. An average operating profit of at least Rs 3 crore a year over the preceding three financial years (section 5.1.3). An issuer that misses it could still list if at least 75% of the net offer is allotted to qualified institutional buyers, with a full refund if that is not achieved (section 5.1.4).
- More allottees, one-share trading. The minimum number of allottees would rise "from 200 to 500" (section 5.5.2.3.2), and the trading lot after listing would be rationalised "to one share" (section 5.5.3.3.1).
- Lower issue costs. The 100% underwriting requirement and the lead manager's own 15% underwriting obligation would go, replaced by main board underwriting rules (section 5.6.1.3.1), and SEBI proposes to "remove the requirement of compulsory market making in SME securities" (section 5.6.2.3.1).
- General corporate purposes. The Rs 10 crore absolute cap would be removed, keeping the limit of 15% of the amount raised (section 5.2.3.1).
- No more reverse migration. Migration from the main board to the SME platform would be removed (section 5.7.3.1). Moving up from SME to main board stays optional between Rs 1,000 crore and Rs 4,000 crore of market value and becomes mandatory above Rs 4,000 crore.
- Lock-in. Lock-in on pre-issue capital held by people other than promoters would be cut from one year to six months, in line with the main board (section 5.4).
One correction to how this has circulated on social media. Several summaries said companies above Rs 4,000 crore are "required to migrate" as if that were the listing test. In the paper, Rs 1,000 crore is the main threshold for the SME platform; Rs 4,000 crore is the upper edge of an optional band, above which a company must use, or move to, the main board.
Timing, if adopted. The paper proposes a three-month transition: the revised framework would apply mandatorily to draft offer documents filed three months or more after it is notified in the Official Gazette (section 5.9). Nothing changes until SEBI's board approves final rules and they are notified, and the final version can differ from the proposal.
What this means for reading an SME IPO today: the current rules still apply, including the Rs 2 lakh minimum application and the existing lot sizes. Every SME issue we track shows its own lot size and minimum bid, taken from its offer document.
Sources: SEBI, consultation paper dated 14 October 2026, sebi.gov.in/reports-and-statistics/reports/oct-2026/ (page id _105252), PDF at sebi.gov.in/sebi_data/attachdocs/oct-2026/1791972839578.pdf. First reported in a social post by Moneycontrol; every figure above was checked against the SEBI paper itself. Comments can be submitted to SEBI until 4 November 2026 through its public comments page.