New Delhi, May 30 -- Regulations barring retail investors from the high-risk initial public offerings of tiny businesses have failed to prevent the category from participating in at least a few such issues. The reason: a loophole in the rules.

National Stock Exchange and BSE Ltd, in consultation with the Securities and Exchange Board of India (Sebi), amended rules to raise the minimum bid for the IPOs of small and medium enterprises (SMEs) to more than Rs.2 lakh for offers filed with the exchange after 8 March. The change in Regulation 267 of the Issue of Capital and Disclosure Requirements (ICDR) effectively prevents retail or small individual investors from such issues, since they cannot invest more than Rs.2 lakh.

However, IPOs appro...