Social Stock Exchange in India

About Social Stock Exchange 2022

A Social Stock Exchange Meaning is to serve the private and non-profit sectors by helping them to raise capital.

Working:

Listing: For-profit and not-for-profit social enterprises can be listed on the Social Stock Exchange. They will be regulated by SEBI.

Issuing Bonds: Not-for-profit entities will be eligible to directly issue zero-coupon or zero-principal bonds, social/development impact funds or mutual funds, through the platform.

For-Profit entities may raise funds through equity, debt, development impact bonds, or social venture funds.

Eligibility: For being eligible to be listed on Social Stock Exchange in India, a social enterprise has to be engaged in a social activity out of several broad activities. They include:

Eradicating hunger, poverty, malnutrition and inequality;

Sustainable and resilient cities, including slum development;

Promoting Healthcare;

Supporting education, employability and livelihoods;

Gender equality and empowerment of women and LGBTQIA communities;

Environment sustainability;

Supporting incubators of social enterprise.

Non-eligibility: A social enterprise does not include corporate foundations, political or religious groups, professional or trade associations, infrastructure companies, except affordable housing.

Additional Requirements: Eventhough both for-profit and not-for-profit social enterprises will be eligible to participate in the SSE, for-profit enterprises have additional reporting requirements.

Benefits of Social Stock Exchange News

• Accessing funds: Social enterprises can access funds from donors, philanthropic foundations and corporate social responsibility (CSR) spenders using SSE.
• Better utilization of funds: Social Stock Exchange helps in utilistion of funds in an organized way. There will be track of spending by the entity.
• Greater visibility: Smaller social enterprises will be able raise funds through SSE. This would not be possible through conventional way.

Concerns with Social Stock Exchange in India

• Misuse of funds: There is a possibility of misuse and diversion of funds for purposes other than social causes.
• Lack of financial resources: Social enterprises may not possess the expertise or funds to maintain financial records of their transaction.
• Assessing impact of funds: There is no mechanism in place that can assess the social impact of the funds raised on SSE.

Bombay Stock Exchange (BSE)

• The BSE is the oldest stock exchange in Asia and the 10th oldest in the world. It was established by cotton merchant Premchand Roychand in 1875.
• Based on market capitalization, it is the 8th largest stock exchange in the world. The BSE was recognised by the Indian Government under the Securities Contracts Regulation Act in 1957.
• BSE SENSEX is the market-weighted stock market index of 30 well-established and financially sound companies listed on the Bombay Stock Exchange.

 Social Stock Exchange SEBI

• SEBI is a statutory body, responsible for regulating securities and commodity market in India. It comes under Ministry of Finance, Government of India. It derives powers from the SEBI Act, 1992.
• SEBI has quasi-legislative, quasi-judicial and quasi-executive powers.

Zero-Coupon Bonds

• Zero-coupon bonds do not pay interest, but are instead traded at a deep discount. After maturity, they are redeemed at full face value.

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