BOOM

Trending Searches

    SUPPORT
    BOOM

    Trending News

      • Fact Check 
        • Fast Check
        • Politics
        • Business
        • Entertainment
        • Social
        • Sports
        • World
      • Law
      • Explainers
      • News 
        • All News
      • Decode 
        • Impact
        • Scamcheck
        • Life
        • Voices
      • Media Buddhi 
        • Digital Buddhi
        • Senior Citizens
        • Videos
      • Web Stories
      • BOOM Research
      • BOOM Labs
      • Deepfake Tracker
      • Videos 
        • Facts Neeti
      • Home-icon
        Home
      • About Us-icon
        About Us
      • Authors-icon
        Authors
      • Team-icon
        Team
      • Careers-icon
        Careers
      • Internship-icon
        Internship
      • Contact Us-icon
        Contact Us
      • Methodology-icon
        Methodology
      • Correction Policy-icon
        Correction Policy
      • Non-Partnership Policy-icon
        Non-Partnership Policy
      • Cookie Policy-icon
        Cookie Policy
      • Grievance Redressal-icon
        Grievance Redressal
      • Republishing Guidelines-icon
        Republishing Guidelines
      • Fact Check-icon
        Fact Check
        Fast Check
        Politics
        Business
        Entertainment
        Social
        Sports
        World
      • Law-icon
        Law
      • Explainers-icon
        Explainers
      • News-icon
        News
        All News
      • Decode-icon
        Decode
        Impact
        Scamcheck
        Life
        Voices
      • Media Buddhi-icon
        Media Buddhi
        Digital Buddhi
        Senior Citizens
        Videos
      • Web Stories-icon
        Web Stories
      • BOOM Research-icon
        BOOM Research
      • BOOM Labs-icon
        BOOM Labs
      • Deepfake Tracker-icon
        Deepfake Tracker
      • Videos-icon
        Videos
        Facts Neeti
      Trending Tags
      TRENDING
      • #Operation Sindoor
      • #Pahalgam Terror Attack
      • #Narendra Modi
      • #Rahul Gandhi
      • #Waqf Amendment Bill
      • #Arvind Kejriwal
      • #Deepfake
      • #Artificial Intelligence
      • Home
      • Explainers
      • Explained: What Are Social Stock...
      Explainers

      Explained: What Are Social Stock Exchanges, How Will It Help?

      The concept of social stock exchanges has recently been approved by SEBI but has been around for a while globally

      By - Mohammed Kudrati |
      Published -  30 Sept 2021 5:33 PM IST
    • Boomlive
      Explained: What Are Social Stock Exchanges, How Will It Help?

      Social enterprises and impact investing got a renewed impetus from the Securities and Exchange Board of India (SEBI) on September 28, when it gave the green signal for the framework of social stock exchanges in the country

      In her first Union Budget speech (July 2019), Finance Minister Nirmala Sitharaman had announced the plan to build a social stock exchange, under the ambit of SEBI.

      "It is time to take our capital markets closer to the masses and meet various social welfare objectives related to inclusive growth and financial inclusion. I propose to initiate steps towards creating an electronic fund raising platform – a social stock exchange - under the regulatory ambit of Securities and Exchange Board of India (SEBI) for listing social enterprises and voluntary organizations working for the realization of a social welfare objective so that they can raise capital as equity, debt or as units like a mutual fund"

      Nirmala Sitharaman's Union Budget speech

      Impact investing and social enterprises use capital to invest towards attaining observable or measurable social or environmental benefits; making a profit in the process (for a for-profit enterprises).

      The SEBI board's approval is largely based on the recommendations of its own working and technical group, which will allow groups with social impact and intent as its primary goal to raise development finance through a variety of sources that are commonly floated on stock exchanges or are market-linked. The approval of the framework of social stock exchanges moves to pave a pathway for funds for social enterprises via these channels.

      Also Read: Explained: What Is A Bad Bank, How It Has Been Used Around The World

      The Indian Social Stock Exchange Model

      SEBI has outlined a number of regulations that will govern social stock exchanges in India.

      First, these exchanges will be separate segments in existing stock exchanges in India.

      The social enterprises, who will be eligible to participate can be non-profit organisations (NPOs) or for-profit social enterprises (FPE). However, they will have to primarily work in a social activity among a list of 15 such broad eligible activities.

      Though SEBI's announcement does not list these activities, its technical group report released in May this year does highlight 15 areas that would make a social enterprise eligible for participation.

      Also Read: Explained: Stock Market Price Bands And Circuit Breakers



      NPOs may raise funds through:

      1. Equity
      2. Zero Coupon Zero Principle bonds
      3. Development Impact Bonds
      4. Mutual funds
      5. Social Impact Funds


      Social Impact Funds are re-christened versions of social venture funds, which are AIFs (Alternate Investment Funds) already under the ambit of SEBI. Quarterly data from SEBI shows that social venture funds had cumulatively raised ₹3,671 crore in commitments, ₹2,463 crores in funds and had made investments worth ₹1,105 crores as of March 31 this year. This can be viewed here. The Board also approved reducing the corpus requirements for these funds from ₹20 crores to ₹5 crores.

      Also Read: Explained: Why IRCTC's Share Price Plunged, Govt Reverses Decision

      While the technical report did outline that several of these avenues such as mutual funds could be a conduit to retail participation and retail philanthropic involvements alongside institutional involvements in social stock exchanges, SEBI's release does not differentiate among potential players who can invest in these instruments.

      SEBI further outlined how compliance for them would take place. Initially, only firms or institutions having expertise in social audit would be able to do so. Further, a directorate for social audit would also function under the Institute for Chartered Accountants of India.

      Find SEBI's release outlining its Board's approval here.

      Social Stock Exchanges Around The World

      Social stock exchanges have been opened around the world, but not all of them provide platforms to trade in stocks or any and all financial instruments in the traditional sense. These exchanges come in different formats. These formats can be seen below:



      Such exchanges also exist in Brazil and Kenya.

      Find SEBI's technical report here.

      Also Read: Sensex Touches 60,000: How It Has Travelled Since 1979


      Tags

      Social Stock ExchangeSEBISingaporeKenyaBrazilUnited KingdomMutual FundsNirmala SitharamanStock ExchangeIndia
      Read Full Article
      Next Story
      Our website is made possible by displaying online advertisements to our visitors.
      Please consider supporting us by disabling your ad blocker. Please reload after ad blocker is disabled.
      X

      Subscribe to BOOM Newsletters

      👉 No spam, no paywall — but verified insights.

      Please enter a Email Address
      Subscribe for free!

      Stay Ahead of Misinformation!

      Please enter a Email Address
      Subscribe Now🛡️ 100% Privacy Protected | No Spam, Just Facts
      By subscribing, you agree with the Terms & conditions and Privacy Policy connected to the offer

      Thank you for subscribing!

      You’re now part of the BOOM community.

      Or, Subscribe to receive latest news via email
      Subscribed Successfully...
      Copy HTMLHTML is copied!
      There's no data to copy!