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Social Stock Exchange: how not-for-profits raise money on a stock exchange

By CAShorts DeskPublished Sources: PIB (MSDE); SEBI Master Circular on SSE; NSE circular, SSE FAQ and NSDC fund-raising document; Union Budget 2019-20 speech; NSE

Why in news: On 22 October 2026, NSDC marked its first Zero Coupon Zero Principal issue on NSE's Social Stock Exchange, with NABARD subscribing Rs 4 crore.

Social Stock Exchange: how not-for-profits raise money on a stock exchange
Illustration (AI-generated)

The Social Stock Exchange (SSE) is a SEBI-regulated segment of a stock exchange where not-for-profit organisations and social enterprises raise funds and report their social impact every year. On 22 October 2026, NSDC marked its first Zero Coupon Zero Principal issue on NSE's SSE, with NABARD subscribing Rs 4 crore.

Syllabus: GS3 · Indian Economy & Growth; GS2 · Statutory & Regulatory Bodies; GS2 · NGOs, SHGs & Civil Society

Why this matters for UPSC

GS III (mobilisation of resources, capital markets) and GS II (role of NGOs and development finance): Prelims can ask who may issue Zero Coupon Zero Principal instruments and what SEBI's SSE rules require; Mains, about paying for social outcomes.

In short

India's Social Stock Exchange is a SEBI-regulated stock exchange segment where social enterprises raise money and must report verified social impact, testing whether markets can fund public good.

How an NPO raises SSEfundsNPOsregisterfirstFund raisingdocumentIssue ZCZPAnnualImpactReportIndependentassessment

The SSE can make giving accountable and fund outcomes, but SEBI must keep entry and reporting costs low enough for grassroots organisations to join.

Why it matters

A charity that trains rural youth usually depends on a few large donors and must convince each one separately. On a Social Stock Exchange it can put one project before many funders at once, from a development bank to a person giving Rs 1,000, while public filings and an independently assessed impact report show where the money went. Donors get evidence instead of brochures, and a State government can pay for results, such as a young person actually placed in a job abroad, instead of paying for training alone. The larger question is whether India can draw private and public money into social causes without the paperwork pushing small organisations out.

Prelims pointers

  • Budget speech 2019-20, para 34: proposed an electronic fund-raising platform under SEBI so social enterprises could raise equity, debt or mutual fund-like units.
  • NPO forms allowed: charitable trusts (Indian Trusts Act, 1882, a State public trust law or Registration Act, 1908), societies (Societies Registration Act, 1860 or State law), Section 8 companies.
  • NPO registration test: at least 3 years old, Rs 50 lakh annual spending and Rs 10 lakh funding in the past financial year, valid income-tax exemption registration.
  • Excluded from being social enterprises: corporate foundations, political or religious organisations, professional or trade associations, infrastructure and housing companies except affordable housing.
  • ZCZP terms: demat only; not transferable until tenure ends; minimum issue Rs 50 lakh; minimum application Rs 1,000, cut from Rs 10,000 in March 2025.
  • Disclosures: NPOs file annual disclosures under LODR Regulation 91C; every social enterprise using the SSE files an Annual Impact Report under Regulation 91E.
  • Social Impact Assessors: individuals in a self-regulatory organisation under ICAI, ICMAI or ICSI who have passed a National Institute of Securities Markets certification.
  • First SSE listing: SGBS Unnati Foundation, a Bengaluru not-for-profit, on NSE in December 2023, raising about Rs 1.8 crore at 90% subscription.

Practise a UPSC-style question

With reference to Zero Coupon Zero Principal (ZCZP) instruments on India's Social Stock Exchange, consider the following statements:

1. They can be issued only by a Not-for-Profit Organisation registered on a Social Stock Exchange.

2. An issuer may offer them in physical form or in dematerialised form, at its choice.

3. If an issue is subscribed below 75% of its size, the money raised must be refunded.

Which of the statements given above is/are correct?

  1. (a) 1 and 2 only
  2. (b) 2 and 3 only
  3. (c) 1 and 3 only
  4. (d) 1, 2 and 3
Show the answer

Answer: (c) 1 and 3 only

Answer: (c) 1 and 3 only. Only registered NPOs issue ZCZP and a sub-75% issue is refunded; physical form is not allowed.

Statement 1: correct. NSE's FAQ on the SSE says ZCZP instruments are issued only by a Not-for-Profit Organisation registered on an SSE; for-profit social enterprises use equity or debt.

Statement 2: incorrect. SEBI's Master Circular of 19 January 2026 says ZCZP instruments shall be issued in dematerialised form only.

Statement 3: correct. The Master Circular sets minimum subscription at 75% of the funds proposed to be raised and requires a refund if subscription falls below it.

Eliminate: statement 2 is wrong because ZCZP is demat-only. Out: (a), (b), (d).

Trap: Sounds right. Many older securities could be held as physical certificates, so a choice of form seems natural, but SEBI allows ZCZP only in demat form.

Remember: ZCZP: registered NPOs only, demat only, Rs 50 lakh minimum issue, Rs 1,000 minimum application, 75% or refund.

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