Blab Business
West Bengal Government Aims to Revive Calcutta Stock Exchange Amid Regulatory and Market Challenges
The West Bengal Finance Minister, Swapan Dasgupta, announced in his 2026 budget speech that the state will support a revival of the Calcutta Stock Exchange (CSE), a 118‑year‑old bourse that has not traded since 2013. The proposal is part of a broader effort by the new BJP‑led government to restore Kolkata’s status as a financial hub.
The CSE was founded in May 1908 and was once the third largest stock exchange in India. It was owned by the Ministry of Finance, Government of India. Trading on the CSE platform was suspended in April 2013 because the exchange failed to establish or tie up with a clearing corporation, a regulatory requirement. Since then, CSE members have conducted trades directly on the National Stock Exchange (NSE) platform, a service that was discontinued in 2024.
Dasgupta said that the CSE is “on the verge of closure” and that the state government would provide assistance to bring the exchange back to life. He outlined several potential benefits: easier access to capital for companies in eastern India, lower costs of listing and trading, and the creation of new jobs. The plan also includes listing profitable state‑owned enterprises (PSUs) on the CSE to unlock corporate value and increase state revenues.
However, the revival faces significant hurdles. A stock exchange must attract a broad base of market participants to survive. The NSE and the Bombay Stock Exchange (BSE) already offer superior infrastructure, including advanced trading platforms, clearing corporations, depository services, and market surveillance. Even if the CSE upgrades its technology, its lower liquidity would raise transaction costs and reduce trading efficiency.
Companies that want to raise capital typically prefer larger exchanges because of their wider investor base and deeper liquidity. The CSE’s limited market depth could make it less attractive to issuers.
The challenges are illustrated by the experience of the Metropolitan Stock Exchange of India Ltd (MSEI). Despite backing from banks and investors such as Groww and Zerodha’s Rainmatter Investments, MSEI still struggles to gain market share. Similarly, the National Commodity & Derivatives Exchange (NCDEX) has received regulatory approval to launch equity and derivatives products, but it plans to start with mutual fund offerings before expanding.
Another concern is the potential focus on small and medium enterprises (SMEs) from eastern India. Recent scams on the NSE SME and BSE SME platforms, involving siphoning of funds by promoters, have raised doubts about the safety of SME listings. The CSE would need robust safeguards to protect investors.
The exchange also has a credibility deficit. In 2017, the Securities and Exchange Board of India (SEBI) identified 145 of the CSE’s 331 listed companies—nearly 45 percent—as shell companies. Shell entities often have little or no genuine business activity and are used for money laundering, tax evasion, and concealing ownership.
The West Bengal government’s support alone will not guarantee a successful turnaround. The CSE must undergo regulatory reforms, secure a clear operational framework, and attract a critical mass of participants. The government’s announcement comes amid a broader context of regional exchange closures. SEBI has asked the CSE to exit, a matter that is currently sub‑judice before the Calcutta High Court. Thirteen other regional exchanges, including the Bangalore, Hyderabad, and Madras stock exchanges, have closed in the last three years under SEBI’s exit policy.
The revival proposal also aligns with the state’s broader economic agenda. In 2026, the West Bengal government created five new districts—Kolkata, Basirhat, Sundarban, Jangipur, and Arambagh—expanding administrative reach and potentially increasing the pool of businesses that could benefit from a local exchange.
In summary, the West Bengal Finance Minister’s plan to revive the CSE is a high‑profile initiative that could bring tangible benefits to eastern Indian companies. Yet the proposal must overcome significant obstacles, including infrastructure gaps, liquidity constraints, investor confidence, and regulatory compliance. The outcome will depend on the ability of the exchange to build a credible, competitive platform that can attract issuers and investors alike.
The next steps for the CSE will involve detailed feasibility studies, engagement with potential market participants, and coordination with SEBI and other regulatory bodies. The West Bengal government will likely monitor progress closely, as the revival’s success could influence the future of regional exchanges across India.
The CSE was founded in May 1908 and was once the third largest stock exchange in India. It was owned by the Ministry of Finance, Government of India. Trading on the CSE platform was suspended in April 2013 because the exchange failed to establish or tie up with a clearing corporation, a regulatory requirement. Since then, CSE members have conducted trades directly on the National Stock Exchange (NSE) platform, a service that was discontinued in 2024.
Dasgupta said that the CSE is “on the verge of closure” and that the state government would provide assistance to bring the exchange back to life. He outlined several potential benefits: easier access to capital for companies in eastern India, lower costs of listing and trading, and the creation of new jobs. The plan also includes listing profitable state‑owned enterprises (PSUs) on the CSE to unlock corporate value and increase state revenues.
However, the revival faces significant hurdles. A stock exchange must attract a broad base of market participants to survive. The NSE and the Bombay Stock Exchange (BSE) already offer superior infrastructure, including advanced trading platforms, clearing corporations, depository services, and market surveillance. Even if the CSE upgrades its technology, its lower liquidity would raise transaction costs and reduce trading efficiency.
Companies that want to raise capital typically prefer larger exchanges because of their wider investor base and deeper liquidity. The CSE’s limited market depth could make it less attractive to issuers.
The challenges are illustrated by the experience of the Metropolitan Stock Exchange of India Ltd (MSEI). Despite backing from banks and investors such as Groww and Zerodha’s Rainmatter Investments, MSEI still struggles to gain market share. Similarly, the National Commodity & Derivatives Exchange (NCDEX) has received regulatory approval to launch equity and derivatives products, but it plans to start with mutual fund offerings before expanding.
Another concern is the potential focus on small and medium enterprises (SMEs) from eastern India. Recent scams on the NSE SME and BSE SME platforms, involving siphoning of funds by promoters, have raised doubts about the safety of SME listings. The CSE would need robust safeguards to protect investors.
The exchange also has a credibility deficit. In 2017, the Securities and Exchange Board of India (SEBI) identified 145 of the CSE’s 331 listed companies—nearly 45 percent—as shell companies. Shell entities often have little or no genuine business activity and are used for money laundering, tax evasion, and concealing ownership.
The West Bengal government’s support alone will not guarantee a successful turnaround. The CSE must undergo regulatory reforms, secure a clear operational framework, and attract a critical mass of participants. The government’s announcement comes amid a broader context of regional exchange closures. SEBI has asked the CSE to exit, a matter that is currently sub‑judice before the Calcutta High Court. Thirteen other regional exchanges, including the Bangalore, Hyderabad, and Madras stock exchanges, have closed in the last three years under SEBI’s exit policy.
The revival proposal also aligns with the state’s broader economic agenda. In 2026, the West Bengal government created five new districts—Kolkata, Basirhat, Sundarban, Jangipur, and Arambagh—expanding administrative reach and potentially increasing the pool of businesses that could benefit from a local exchange.
In summary, the West Bengal Finance Minister’s plan to revive the CSE is a high‑profile initiative that could bring tangible benefits to eastern Indian companies. Yet the proposal must overcome significant obstacles, including infrastructure gaps, liquidity constraints, investor confidence, and regulatory compliance. The outcome will depend on the ability of the exchange to build a credible, competitive platform that can attract issuers and investors alike.
The next steps for the CSE will involve detailed feasibility studies, engagement with potential market participants, and coordination with SEBI and other regulatory bodies. The West Bengal government will likely monitor progress closely, as the revival’s success could influence the future of regional exchanges across India.
