Indian markets could soon see the introduction of so-called social stock exchanges, which enable investors to make impact investments.
Impact investments are the kind made into enterprises and funds with the aim of delivering measurable social benefits or making environmental impact, apart from earning a financial return.
“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,” said Finance Minister Nirmala Sitharaman in the Budget speech.
The proposed exchanges will be regulated by the Securities and Exchange Board of India (Sebi) and will allow listing of social enterprises and voluntary organisations.
The FM said entities working for the realisation of a social welfare objective will be able to raise both, equity and debt through an electronic fund raising platform.
Globally, there are a handful of social stock exchanges such as Singapore’s Impact Investment Exchange Asia and London’s Social Stock Exchange. These exchanges allow companies operating in sectors such as health, environment and transportation to raise risk capital.
“The social exchange platform is an innovative measure to involve public participation in social causes through the equity route,” says Puneet Maheshwari, director, Upstox. Market experts say Sebi could allow companies with proven track record to access public capital through this platform.