Sebi mulls cutting minimum application size on social stock exchange

Sebi on Friday proposed to cut the minimum application size for public issuance of Zero Coupon Zero Principal instruments issued by non-profit organizations on Social Stock Exchange (SSE) to either Rs 5,000 or Rs 1,000 from the existing Rs 10,000.

The move, if implemented, would boost the retail participation in ZCZP issuances by NPOs.

Zero-coupon, zero-principal (ZCZP) are instruments for donating money to non-profit organizations (NPOs) listed on the SSE.

In its consultation paper, Sebi has proposed that minimum application size for ZCZP issuance should be reduced to Rs 5,000 or to a much smaller amount of Rs 1,000 so as to enable more retail participation in ZCZP issuances by NPO on SSE.

At present, the minimum application size is Rs 10,000.

Sebi has been taking measures to widen the participation of subscribers at the SSE. In November 2023, the regulator reduced the issue size of ZCZP from Rs 1 crore to Rs 50 lakh. It also cut the minimum application size for donors to Rs 10,000 from Rs 2 lakh.

The regulator has sought public comments on the proposal by March 14.

The proposal came after issuers highlighted the retail interest in "giving" through SSE is increasing; however, the minimum application size of Rs 10,000 could be a prohibitive for many.

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.