FINANCE MINISTER Nirmala Sitharaman proposed setting up a stock exchange for enterprises running social welfare projects that would help them raise capital to realise their objectives, a move that is being touted by some analysts as a game changer for organisations focussed on such welfare work.
Under this mechanism, social welfare and volunteer organisations would be listed on a platform operating under the Securities and Exchange Board of India (SEBI), similar to how companies on stock exchanges like the Bombay Stock Exchange are listed. This would allow infusion of capital into these organisations from investors.
“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 Sitharaman.
“I propose to initiate steps towards creating an electronic fund raising platform — a social stock exchange — under the regulatory ambit of Securities and Exchange Board of India for listing social enterprises and voluntary organisations working for the realisation of a social welfare objective so that they can raise capital as equity, debt or as units like a mutual fund,” she said.
Similar social stock exchange models already exist in some countries. For instance, Canada has Social Venture Connexion (SVX), which connects investors with impact funds and ventures. Similarly, South Africa has the South African Social Investment Exchange (SASIX), which lists organisations that are achieving a “measurable social impact” and allows investment in their projects. Other countries with social stock exchanges include the UK and Singapore.
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“This proposal seems to be an encouraging move, as it would help social enterprises/ NGOs to raise funds through equity, debt or as units like a MF (mutual fund) to meet social welfare objectives. This step would clearly stimulate governance in the social sector,” said Religare Broking Ltd’s retail distribution president, Jayant Manglik.
“It will serve as a platform for fund mobilisation for ventures which may have an overriding social purpose, which is sustainable and reflective of the changing social attitudes towards impact investing,” said Emkay Wealth Management head of research Joseph Thomas. Social stock exchanges promote socially valuable objectives and a reasonable financial return, he said.— With PTI inputs
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