Social Stock Exchanges

Why in news?

• A technical group on social stock exchanges (SSEs), constituted by the Securities and Exchange Board of India (Sebi), has recommended that political and religious organisations, trade organisations as well as corporate foundations should not be allowed to raise funds through SSEs.

About Social Stock Exchanges:

• The idea of a social stock exchange (SSE) was mooted by Finance Minister Nirmala Sitharaman while presenting the Union Budget 2019-20.
• The purpose of SSE is for listing of social enterprise and voluntary organisations.
• Listing of social enterprises on an SSE would also improve visibility of social enterprises in the eyes of large investors and philanthropic organisations.
• Apart from equity capital, social enterprises need debt, particularly to meet working capital requirements. Currently, only a handful of private impact investors provide patient debt to early-stage social enterprises.
• Listing debt products on the SSE would encourage banks, NBFCs and other investors to participate in the growth journey of these social enterprises and thereby deepen their impact.

The Recommendations:

• The working group has recommended allowing non-profit organizations to directly list on SSEs through issuance of bonds.
• It also suggested that for-profit social enterprises be allowed to list on the platform but with enhanced reporting requirements.
• The working group has also suggested that the social stock exchange can be housed within the existing national bourses like the BSE and the National Stock Exchange.

Prelims Question:

Consider the following statements regarding Social Stock Exchanges:
1.It is a platform which allows investors to buy shares in social enterprises.
2.India will be the first country to have a social stock exchange.
Which of the statements given above is/are correct?
(a)1 only
(b)2 only
(c)Both 1 and 2
(d)Neither 1 nor 2

Answer to the Prelims question