Social Stock Exchange

IN NEWS:

• A working group constituted by the Securities and Exchange Board of India (SEBI) on social stock exchanges has submitted its recommendations.

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:

Q. 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?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Answer to the Prelims question