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Why a social stock exchange could be beneficial for India

18th June 2020
Why a social stock exchange could be beneficial for India
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Photo credit: The Economic Times

By Roopa Kudva

On June 1, the Securities and Exchange Board of India (Sebi) published the report of the working group for setting up a social stock exchange (SSE). The committee has adopted a holistic sector development approach: besides recommending specific instruments for fund-raising by non-profit organisations (NPOs), it proposes nurturing key sector-level institutions like information repositories (IRs) and social auditors.

Standardised impact measurement frameworks and reporting norms for entities seeking to raise funds from SSE have been suggested. A capacity-building fund of Rs. 100 crore for sector development is proposed, which will also prioritise support to smaller NPOs. If this vision is realised, India’s SSE will be a globally unique initiative in social finance.

The report recommends the promotion and increased use of already available structures like social venture funds (SVFs) and mutual funds (MFs) for funding social causes, and proposes a new ‘zero coupon zero principal bond’. This bond will effectively be a donation, but issued as an instrument that can be listed on SSE, providing NPOs improved visibility and access to additional pools of capital.

To know more, read the full op-ed here.