Nirmala Sitharaman announces creation of a social stock exchange to help NGOs get funds

Nirmala Sitharaman announces creation of a social stock exchange to help NGOs get funds

Organisations that work for social welfare will be able to list on the exchange the way private firms do on the stock market.

Organisations that work for social welfare will now have a new avenue through which to raise money. Finance Minister Nirmala Sitharaman on Friday announced a plan to create a social stock exchange under the Securities and Exchange Board of India regulator that would allow these organisations to “list” in the same way that private firms list themselves on a stock market.

“It is time to take capital markets closer to the market and meet various social welfare objectives related to inclusive growth and financial inclusion,” Sitharaman said while presenting her first budget in Parliament. “I propose to initiate steps towards creating an electronic fund-raising platform, a social stock exchange, under SEBI for listing social enterprises and volunteer organisations.”

The minister said that the exchange would help organisations to raise capital through equity, debt or a unit of mutual fund. Social stock exchanges make it easier for investors interesting in social entrepreneurship to find organisation to put money into, with a level of regulation about what the investment goes towards.

They already exist in countries like United Kingdom, Canada, Singapore, South Africa, Brazil, Jamaica and Kenya.

However, this announcement comes at a time when the Centre has been criticised for putting roadblocks on the path of socially inclined non-governmental organisations.

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