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BSE, NSE cut listing fees for SMEs

BSE, NSE cut listing fees for SMEs

 

Due to COVID-19 pandemic, all the sectors have been affected badly but SMEs segments are affected the most. Therefore, during the announcements of details of Rs 20 lakh crore stimulus package, Finance minister Nirmala Sitharaman made special announcements related to MSMEs.

 

Reduction in listing fees:

Now to support SMEs and MSMEs, Indian stock exchanges BSE and NSE came forward. They have relaxed listing norms and reduced listing fee for small and medium enterprises by 25%. However, this norms are applicable to both existing and new firms which are looking forward to list on BSE SME platform and NSE SME platform.

 

What are the Current charges?

Currently for SMEs, Rs 25,000 or 0.1 percent of market capitalization of firm is the listing fee charged by BSE. The NSE charges around Rs 10,000 to Rs 45,000, depending on the SME firms market capitalization. Until now, BSE has 322 small and medium companies listed and has raised around Rs 3,278.84 crore from the market. Their market capitalisation is of Rs 15,865.39 crore so far. On the other side, so far only 209 small and medium companies are listed on NSE and have raised over Rs 3,200 crore.

 

What measures have been announced by government?

Due to the covid-19 lock down, many industries are facing problems like job losses and are cash strapped. During this situation, the main concern for MSMEs is that they are not able to restart their operations due to supply issues and non-availability of labour. Last week, while making announcement for packages in tranches, government changed the definition for MSMEs and linked it to the turnover limits of the companies so that their businesses grow with benefits. They announced measures for MSMEs and Rs 3 lakh crore package for collateral free automatic loans with separate funds for equity support.

However, these Rs 3 lakh crore will also be useful for existing borrowers who have over Rs 100 crore turnover and Rs 25 crore outstanding. Fresh loans can be taken by companies up to 20% of their outstanding. These loans have tenure of 4 years, with moratorium repayment period of 12 months. However, the government will also give them credit guarantee of 100 percent which will cover interest and principal to banking and non-banking institutions. Government will give around Rs 4,000 crore funds to Credit Guarantee Fund Trust for Micro and Small Enterprises (CGFTMSE) with partial credit guarantee to banks. However for expansion of MSMEs, the government will provide corpus of Rs 10,000 crore so that they can also list after expansion.

 

Further Expectations:

Micro, small and medium enterprises (MSMEs) are very cautious while taking any kind of fresh loans, as they are not sure about the demands for their products after all activity resumes. Most of the micro, small and medium businesses and enterprises are expecting from the government, to give them direct relief by waiving their electricity bills and other fixed expenditure such as payment of salaries. However, banks have already reduced their loans such as credit limit. Anil Bhardwaj, Secretary general of federation of Indian micro, small & medium enterprises (FISME) said, for all the small business and enterprises, government will take care of their fixed expenses. MSME industry has three major demand, interest payments, easy access to loans and payments of salaries from the government, during this situation due to COVID-19 lock down.

 

 

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Equity Right

BSE, NSE to launch rupee derivative contracts

BSE, NSE to launch rupee derivative contracts

 

The NSC IFSC  and India INX have introduced rupee derivatives which will help in bringing much needed added liquidity in the economy. This will supplement their customers with several investment options.

The motive behind introduction of rupee derivatives:

The CEO of NSE, Vikram Limaye communicated to the media that the introduction of rupee derivatives will help in the development of (Gujarat International finance tech) GIFT IFSC as a hub of global financial services. This IFSC platform will help in the rupee exposure of non resident participants. This non residents’ participation will also enhance the IFSC’s extended trading hours and USD settlement. They’ve already received permissions for offering securities trading in any currency except the Indian rupee.

 

Importance of introduction of rupee derivatives:

Mr. Limaye added that this measure will enhance the efficiency of Indian rupees’ price discovery. It will be done by eliminating the onshore and offshore markets’ segmentation. It will also allow for trading and hedging using rupee derivatives contracts to their trading partners viz. IFSC entities and banking units. The Finance Minister Nirmala Sitharaman did the inauguration of the rupee derivatives contract. The contract will be having a lot size in NSE IFSC – Rs 20 lacs and India INX – Rs 10 lacs and the contract will be settled in cash.

 

The futures and options:

The futures at the NSE IFSC will have in total three monthly expiry contracts . The options at NSE IFSC will have total seven weekly and three monthly expiry contracts. For the other one i.e India INX, there will be in total eleven weekly and twelve monthly contracts. In the past few months due to the corona virus pandemic crisis, there is an acute volatility faced by the currency markets. The introduction of rupee derivative contracts in the IFSC will lead to more stability during these situations.

 

The Contracts:

The chairman of India INX, Ashishkumar Chauhan communicated to the media that the size of contract will be Rs 10 lacs and the trading is made available from 8th May 2020, 3:30 pm IST. The trading is for both the pairs viz. USD-INR and INR-USD. He added that for the USD-INR product, many of the people like the exporters, importers, traders, etc associated with any kinds of businesses have expressed their keen interest. The Gandhinagar GIFT City is the only IFSC situated in India having zero short term, zero long-term, zero stamp duty and zero transaction taxes as of now.

Each and every businessman interested should consider trading and hedging using rupee derivatives contracts at the GIFT City. The MD and CEO of India INX, V Balasubramaniam communicated to the media that he looks towards the best participation of members and international participants. This will be the first launch of offshore Indian rupee derivatives contract.

 

 

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