Sebi lowers minimum investment in social stock exchange to Rs 1,000

Capital markets regulator Sebi on Wednesday said it has reduced the minimum investment amount for Zero Coupon Zero Principal (ZCZP) instruments on the Social Stock Exchange from Rs 10,000 to Rs 1,000. 

ZCZP are instruments for donating money to non-profit organizations (NPOs) listed on the SSE. The move aims to enhance retail participation in social impact investments. 

"Based on recommendations of the Social Stock Exchange Advisory Committee and public comments received in respect of the consultation paper...it is decided to review the existing minimum application size for subscribing to Zero Coupon Zero Principal Instruments from Rs 10,000 to a lower amount i.e. Rs 1,000," Sebi said in a circular. 

The change also modifies the provisions outlined in a previous circular dated September 19, 2022, which was amended on December 28, 2023. 

According to the latest directive, the September 2022 circular will now specify that the minimum investment size for ZCZP instruments will be Rs 1,000. 

By lowering the investment threshold, the Securities and Exchange Board of India (Sebi) expects to encourage more participation from smaller investors, thereby increasing the flow of funds to social enterprises working in sectors such as education and healthcare. 

The latest recommendation will come into effect immediately, the regulator said. SSE 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. The idea was floated by Finance Minister Nirmala Sitharaman in her Union Budget 2019-20 speech. 

SSE is a separate segment of the existing stock exchanges that brings together social enterprises and donors, facilitates funding and growth of social enterprises and enables mechanisms to ensure robust standards of impact and financial reporting.