Both BSE and NSE have received clearance from the SEBI to set up Social Stock Exchanges (SSEs). SSE’s were contemplated in 2019-20 Budget. It makes available the funding from open market to social enterprises and voluntary organisations. SSEs thus facilitate funding for non-profit organisations (NPOs) and for-profit social enterprises (FPEs). SSEs will function as distinct division of the conventional stock exchanges.

SEBI recognises a social enterprise when 67% of its activities are listed on SEBI’s framework. It includes activities such as eradicating hunger, poverty, promoting healthcare, education, gender equality and financial inclusion.

If a non-profit organisation desires listing on SSE, it must be registered as a charitable trust or as a company under Sec 8 of the companies Act, 2013. It must have audited spending of at least 50 lac. It must have funding of at least 20 lac in the past financial years. Under the SEBI framework, it must have been working for it at least 3 years as per its registration certificate.

Investors could be institutional and non-institutional. Retail investors can only invest in securities issued by for-profit social enterprises.

Zero-coupon zero-principal (ZCZP) bonds can be floated by NPOs to raise funds on SSEs. Social impact funds (SIFs) can be used by FPEs for raising funds. ZCZP have been declared as securities. These bonds do not have to pay interest or return the principal.