India, Feb. 12 -- SEBI Chairman Tuhin Kanta Pandey on Wednesday rued that despite the developments undertaken in the past, the SME segment is "underscaled" from a capital markets perspective.

Speaking at the India SME Finance and Investment Summit here, Pandey said listings can lead to better governance at such small companies and added that the watchdog had found certain challenges on this front in the past.

"The SME capital market remains under-scaled relative to India's potential," Pandey said, adding that entities hesitate because capital markets seem unfamiliar and also due to limited access to merchant bankers. Pointing to progress on listing over the last few years, he added that the cost of raising capital through the Initial Pu...