NGOs vs. GoI: The Conflicts and Scrutinies

What are Social Stock Exchanges?


From UPSC perspective, the following things are important :

Prelims level: Social stock exchange

Mains level: NGO/NPO and their financing solutions

The Economic Survey 2021 has backed setting up of Social Stock Exchange in India.

Q. What are Social Stock Exchanges? Discuss how it will help finance social enterprises in India.

What are Social Stock Exchanges (SSEs)?

  • An SSE is a platform which allows investors to buy shares in social enterprises vetted by an official exchange.
  • The Union Budget 2019 proposed setting up of first of its kind SSE in India.
  • The SSE will function as a common platform where social enterprises can raise funds from the public.
  • It will function on the lines of major stock exchanges like BSE and NSE. However, the purpose of the Social Stock Exchange will be different – not profit, but social welfare.
  • Under the regulatory ambit of SEBI, a listing of social enterprises and voluntary organizations will be undertaken so that they can raise capital as equity, debt or as units like a mutual fund.

Why SSEs?

  • India needs massive investments in the coming years to be able to meet the human development goals identified by global bodies like the UN.
  • This can’t be done through government expenditure alone. Private enterprises working in the social sector also need to step up their activities.
  • Currently, social enterprises are very active in India. However, they face challenges in raising funds.
  • One of the biggest hurdles they face is, apparently, the lack of trust from common investors.


  • There is a great opportunity to unlock funds from donors, philanthropic foundations and CSR spenders, in the form of zero-coupon zero principal bonds. These bonds will be listed on the SSE.
  • At first, the SSE could become a repository of social enterprises and impact investors.
  • The registration could be done through a standard process.
  • The SEs could be categorized into different stages such as as- Idea, growth stage and likewise, investors can also be grouped based on the type of investment.

Development so far

  • The Economic Survey 2021 highlighted the concept of setting up a social stock exchange (SSE) in India.
  • It will be under the regulatory ambit of the Securities and Exchange Board of India (SEBI).
  • SEBI constituted a working group (WG) on social stock exchanges back in September 2019.
  • The WG has outlined its vision and made recommendations, which include the participation of NPOs and for-profit enterprises (FPE) on SSE subject to committing to minimum reporting requirements.

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