Finance Minister Nirmala Sitharaman said that the exchange would help social and voluntary organisations which work for social causes to raise capital as equity, debt or a unit of mutual funds.

Finance Minister proposes Social Stock Exchange for social enterprises What it means
Money Budget 2019 Friday, July 05, 2019 - 15:24

Union Finance Minister Nirmala Sitharaman on Friday announced the setting up of a social stock exchange under the Securities and Exchange Board of India (SEBI) for the listing of organisations that work for social welfare. Presenting her first Union Budget, the minister said that the exchange would help social and voluntary organisations which work for social causes to raise capital as equity, debt or a unit of mutual funds.

“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. I propose to initiate steps towards creating an electronic fundraising platform – a social stock exchange – under the regulatory ambit of Securities and Exchange Board of India (SEBI) 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,” the Finance Minister said in the Lok Sabha. 

Social stock exchanges have been around for a while and exist in countries like UK, Canada, Singapore and South Africa. The social stock exchange works just as a traditional stock market – investor can buy shares or invest in a social business as per their preference. The proposal comes as a move to encourage more social enterprise start-ups in India. 

“Efforts made by the Reserve Bank will need to be supplemented with further institutional development using stock exchanges. For this purpose, inter-operability of RBI depositories and SEBI depositories would be necessary to bring about a seamless transfer of treasury bills and government securities between RBI and Depository ledgers. The government will take up necessary measures in this regard in consultation with RBI and SEBI,” Nirmala Sitharaman said. 

This measure comes a year after the Narendra Modi-led government cracked down on non-profit organisations – mainly those involved in rights-based advocacy – that receive overseas funding. According to a PTI report, over 13,000 non-government organisations have been acted against by the Union home ministry by cancelling their licences and as many as 4,800 NGOs lost their licenses in 2017 alone for FCRA violations.

Also read: Budget 2019: Top 13 announcements by Nirmala Sitharaman

 

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