SME IPO wave: High subscriptions and quick listing gains mask deeper risks

The surge in IPO listing has been fuelled by a resilient domestic economy, enabling government policies such as simplified listing norms, and the integration of digital payment systems

Long hampered by limited access to formal credit and high monitoring costs, India’s small and medium enterprises (SMEs) have traditionally depended on informal sources of finance. Banks often view them as risky because of information gaps and an absence of collateral. Against this backdrop, fundraising through the equity market, via an initial public offering, or IPO, has emerged as a viable alternative, offering firms a chance to scale up, innovate, and professionalise. As the Reserve Bank of India’s October 2025 Bulletin notes, SME IPO listings on the BSE and National Stock Exchange (NSE) platforms surged more than 87