New Bidding Process for
SME IPOs Introduced by NSE: A Shift Towards Enhanced Transparency and
Efficiency
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Circular
dated: June 18, 2025
In a significant regulatory update
aimed at streamlining the capital raising process for Small and Medium
Enterprises (SMEs), the National Stock Exchange of India Limited (NSE) has
issued Circular No. 07/2025 dated June 18, 2025. This circular outlines key
changes in the bidding process for SME Initial Public Offerings (IPOs) in light
of amendments to the SEBI (Issue of Capital and Disclosure Requirements) (ICDR)
Regulations, 2025.
The updated framework seeks to
bring more discipline and investor clarity to SME IPO participation while
ensuring fair practices in alignment with the evolving capital market
ecosystem.
Key
Highlights of the New SME IPO Bidding Process
1.
Redefinition of Investor Categories:
The “Retail Individual Investor” category has been replaced with a broader
category called “Individual Investor.” This investor is defined as one who bids
for at least 2 lots with a minimum application amount exceeding ₹2 lakhs.
2.
Minimum Bid Criteria:
The minimum bid size has been clearly defined for the new Individual Investor
category—applicants must bid for at least 2 lots with an application value
above ₹2 lakhs. This change ensures more serious and substantial participation
from investors.
3.
Removal of Cut-Off Price Option:
Investors across all categories will no longer have the option to place bids at
the “Cut-off Price.” This change introduces a fixed-price awareness and prompts
investors to make informed pricing decisions while applying.
4.
Restriction on Modifications and Cancellations:
Once submitted, bids cannot be modified downward or canceled for any category
of investors. This brings increased commitment and reduces speculative bidding
behavior.
5.
Timelines for Bidding and UPI Confirmation:
All bidding across categories will close at 4:00 PM on the last day of the
issue. UPI mandate confirmation must be completed by 5:00 PM on the same day,
ensuring prompt processing and reducing delays in fund blocking.
6.
Rules for Reserved Categories:
Special conditions have been defined for applicants under reserved categories:
- Employees can apply for a
minimum of 2 lots with an application size above ₹2 lakhs and in multiples
of lot size not exceeding ₹5 lakhs.
- Shareholders
and Policyholders
must also bid for a minimum of 2 lots with a minimum application of ₹2
lakhs.
7.
QIBs and NIIs Application Requirement:
Qualified Institutional Buyers (QIBs) and Non-Institutional Investors (NIIs)
must apply for more than 2 lots, reinforcing the institutional depth in such
offerings.
Transition
Period and Implementation
The NSE has provided a dual-window
transition period for the smooth adoption of this new framework. Both the
existing and revised processes will remain valid for IPOs opening on or before
June 30, 2025. In cases where there is a spillover of SME IPOs, the existing
process can be used up to July 11, 2025. From July 1, 2025, onwards, the new
bidding norms will be strictly enforced for all fresh SME IPOs.
Conclusion:
Modernizing SME Listings for a Growing Economy
This regulatory upgrade reflects
SEBI’s and NSE’s continuous efforts to ensure that the SME capital market is
transparent, disciplined, and investor-aware. With these new rules, the
ecosystem is expected to witness enhanced credibility and better quality
investor participation, paving the way for stronger capital formation for
emerging businesses.