Context: Unnati, specifically the SGBS Unnati Foundation (SUF), is noted as the inaugural organisation to be listed on the SSE.
Key Points of the article:
- Unnati has become the first entity to be listed on the NSE Social Stock Exchange. SGBS Unnati Foundation is a non-profit organisation that focuses on training youth and has trained over 45,000 individuals.
- They raised ₹1.8 crore from various sources and credited Zero Coupon Zero Principal instruments to the donors’ accounts.
- These instruments are not traded and their value becomes zero after one year.
- The funds raised were intended to train 10,000 youth and assist them in finding jobs.
- Listing on the stock exchange allows for transparency and credibility for investors.
- The SEBI board has recently approved changes to enable wider participation of NPOs on SSEs.
- There are 38 more NPOs registered with the NSE SSE, suggesting the potential for more listings in the future.
- Social impact investments (SSEs) serve as a distinctive method to support social change by connecting donors with non-profit organisations (NPOs).
- SSEs provide benefits like transparency, trust, effectiveness, and cost reduction.
SGBS Unnati Foundation:
- SGBS Unnati Foundation is a non-profit organization that was established in November 2011.
- Its main focus is to provide vocational training to young people who are underprivileged and unemployed, specifically those between the ages of 18 and 25.
- The foundation aims to raise funds through ZCZP bonds in order to train up to 10,000 graduating youth from government colleges across different states, helping them to find employment.
- The training program consists of 165 hours of training for each individual, with 90 hours of classroom learning over a period of 30 days and 75 hours of self-learning content on a mobile application.
- The cost for training each individual is ₹2,000.
Details about Social Stock Exchanges (SSEs):
- SSEs are specialised platforms that help social businesses and non-profits raise funds by connecting them with ethical investors who are interested in organisations that have both corporate and social goals.
- The main goal of SSEs is to create a consistent and organised system for funding, utilisation, measuring impact, and providing information in the social development sector.
Purpose:
- SSEs provide opportunities for social enterprises and voluntary organisations to generate funds through different financial tools such as debt, equity, mutual funds, and specific instruments like ZCZP bonds.
Key aspects:
- SSEs aim to create consistency in the various forms of funding for social development, such as CSR, philanthropy, government funding, and retail charity.
- SSEs strive to create consistent guidelines for funding, measuring impact, disclosing information, and reporting for various social organizations.
- In 2019, the Indian government revealed its intentions to establish a Social Stock Exchange (SSE) in order to improve the fundraising capabilities of social enterprises.
- The SSE is made up of three main components: social organizations, investors, and the SSE and its intermediaries.
- The government has a vital role in the SSE ecosystem as it both facilitates and has an impact on the market.
- The SEBI is responsible for regulating and guiding SSEs. SSEs provide different types of financial instruments that are authorised by SEBI, such as mutual funds, social impact funds (with grant-in/grant-out models), and ZCZP bonds.
What is ZCZP Bonds ?
- A Zero Coupon Zero Principal (ZCZP) bond is a type of bond that does not pay interest and does not repay the principal amount at maturity.
- These bonds are given to non-profit organisations for social development projects and offer a social return on investment instead of financial returns. They have a specified maturity date or are tied to the completion of a specific project.
- ZCZP bonds do not pay interest to investors and instead work as zero-coupon bonds.
- They mature when the project is finished or after a set time period. Non-profit organisations list these bonds on social stock exchanges, where they cannot be traded but can be passed on to legal heirs.
Source: businessline
Practice question:
Q. What is the rationale behind the launch of social stock exchange?
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