Social stock exchange: Pandemic’s gift?
Business
Impact investing in India has witnessed tremendous growth in recent years. The Social Stock Exchange(SSE), in the wake of the ongoing COVID-19 pandemic, is a novel concept in India and is a proposed bourse to raise capital for not-for-profit organizations and for-profit firms (social enterprises).
The idea was floated by Finance Minister Nirmala Sitharaman in her Budget speech of 2019-20.
What is the SSE model?
Key benefits
Transparency and accountability of social investing,
Generation of awareness about India's NPO/NGO/FPE ecosystem,
Access to national and international funding,
Opportunity for investors to be associated with empowerment of local communities & helping in resolution of socio-economic problems,
Reduction of government’s burden to achieve Sustainable Development Goals (SDGs) and,
Tabulation of benefits to investors/ corporations.
Global prevalence
SSE is a matured concept in countries like Canada, Singapore, United Kingdom and South Africa. While the operational frameworks differ, the goal of social impact is instituted across nations.
Recent updates in India
SEBI approved the Social Stock Exchange framework last week, where it has listed 15 broad activities that classify as social activities.
Enterprises seeking to raise funds via this mechanism will be subject to social audits. Eligible NPOs may raise funds through equity, zero-coupon zero principal bonds, mutual funds, social impact funds, and development impact bonds.
No other details have been disclosed in terms of timeline or the launch of the exchange, as of now.
Dire need to address socio-economic problems
India's healthcare crisis during the COVID-19 pandemic, triggering signals of climate change, massive unemployment, and widespread poverty are a testament to a need for direct funding for the social sector.
Financial returns coupled with environmental impact shall pave a way towards greater inclusive growth in the country.
Like what you read? Share this article with your friends and follow us on:
Instagram | Medium | LinkedIn