Context: A SEBI-constituted panel on social stock exchanges has recently recommended direct listing of non-profit organisations through the issuance of bonds and a range of funding mechanisms.


  • The panel or working group was set up by SEBI in September 2019 under the Chairmanship of Ishaat Hussain, Director at SBI Foundation. 
    • The aim was to suggest possible structures and regulations for creating SSE to facilitate listing and fund-raising by social enterprises as well as voluntary organisations.
  • The decision came after the Finance Minister’s budget announcement in July last year about setting up such exchanges to take the capital markets closer to the masses and meet various social welfare objectives.


  • It has recommended allowing non-profit organisations to directly list through issuance of bonds while recommending a range of funding avenues, 
    • including some of the existing mechanisms such as Social Venture Funds (SVFs) under Alternative Investment Funds (AIFs). 
  • The group has also suggested a new minimum reporting standard for organisations that raise funds on social stock exchanges.
  • The working group has also suggested that the social stock exchange can be housed within the existing national bourses (Stock Exchange) like the BSE (Bombay Stock Exchange) and the National Stock Exchange. 
  • Further, it has been recommended that profit social enterprises can also list on SSE with enhanced reporting requirements. 
  • To encourage, giving culture some tax incentives have also been suggested.
  • The report suggested that COVID-19 aid fund can be set up by SSE to activate solutions such as pay-for- success bonds -
    • With philanthropic foundations, CSR spenders and impact investors as outcome funders and 
    • With domestic banks, Non Banking Financial Corporations (NBFCs) and impact investors as lenders. 


  • SSE should foster overall sector development by creating a capacity building unit which will be responsible for encouraging the setting up of a Self-Regulatory Organization (SRO). 
    • This organisation will in turn bring together existing Information Repositories (IRs), in the immediate term for extending requisite support to such bourses.
  • There is a great opportunity to unlock funds from donors, philanthropic foundations and CSR spenders, in the form of zero coupon zero principal bonds if they are listed on the SSE.
  • Housing within the existing national bourses will help the SSE leverage existing infrastructure and client relationships of the exchanges to onboard investors, donors, and social enterprises.
  • Solutions like COVID 19 aid fund can be particularly effective in financing the work of NPOs that are reaching help and relief to migrant workers all over the country.

These recommendations, if implemented as a package, can result in a vibrant and supportive ecosystem, enabling the non-profit sector to realise its full potential for creating social impact.

Social Stock Exchange:

  • It is a platform which allows investors to buy shares in social enterprises vetted by an official exchange.
  • It is a novel concept in India and such a bourse is meant to serve private and non-profit sector providers by channelling greater capital to them.

Social Enterprise:

  • A social enterprise is a revenue-generating business. Its primary objective is to achieve a social objective, for example, providing healthcare or clean energy.
  • This in no way means that a social enterprise can’t be highly profitable. 
  • In fact, most social enterprises look and operate like traditional businesses. 
  • The only catch is that the profit these entities generate is not necessarily used for payouts to stakeholders, but reinvested into their social programmes.


Not for  Profit Company:

  • These are the establishments that are utilized for the welfare of the community and are set up as charitable associations which operate without any motive for profit. 
  • Their primary objective is to furnish service to a specific class or the public at the larger picture. 
  • Usually, they do not produce, buy or sell commodities and may not have credit transactions.
  • A non profit organisations can be registered in India as a Society, under the Registrar of Societies or as a Trust, by making a Trust deed, or as a Section 8 Company, under the Companies Act, 2013.


Alternative Investment Funds:

  • Alternative Investment Fund comprises pooled investment funds which invest in venture capital, private equity, hedge funds, managed futures, etc. 
  • In simpler terms, an AIF refers to an investment which differs from conventional investment avenues such as stocks, debt securities, etc.
  • AIF can be established in the form of a company or a corporate body or a trust or a  Limited Liability Partnership (LLP).
  • Generally, high net worth individuals and institutions invest in Alternative Investment Funds as it requires a high investment amount, unlike Mutual Funds.

Social Venture Fund:

  • It is a category 1 Alternative Investment Fund.
  • (SVF) that typically invests in companies that have a strong social conscience and aim to bring a real change in the society.
  • These companies focus on making profits and solve environmental as well as social issues simultaneously. 
  • Even though it is a kind of philanthropic investment, one can still expect returns because the firms would still make profits.
  • Such investments also bring the best managerial practices, technology and vast experience on the table which makes it a win-win deal for all stakeholders including investors, enterprises and society.

Source: working group constituted by,encourage participation on the platform.

Image Source: Livemint