Sebi Chairperson Madhabi Puri Buch says one of the agenda items in Friday’s board meeting is to get approval to allow the regulator’s staffers to invest in listed non-profit organisations through zero-coupon, zero-principal bonds
The board of the Securities and Exchange Board of India (Sebi), which will meet on Friday, will deliberate on the matter related to allowing regulatory officials to invest in NPOs—non-profit organisations—listed on Social Stock Exchange platforms through zero-coupon, zero-principal instruments.
“We are actually going to our board. The Sebi board tomorrow to take permission for Sebi staff to be able to buy zero coupon zero principal bonds,” said Sebi chairperson Madhabi Puri Buch.
Buch was speaking at a conference to announce the listing of five NGOs on the Social Stock Exchange platform of the National Stock Exchange (NSE).
Incidentally, the board of the capital market watchdog is scheduled to meet on Friday.
Zero coupon zero principal bonds, as the name suggests, refer to instruments that allow entities to raise money, which is not a loan but a donation. Simply put, the borrowing entity does not have to pay interest or principal and hence the name zero coupon zero principal bond.
In December last year, Sebi had released the rules for issuing ZCZP bonds as part of its circular on the overall framework for Social Stock Exchanges.
According to Sebi, such bonds can be issued only in demat form and cannot be transferred from the original subscriber till the expiry of the tenure.
More importantly, the minimum application size has been fixed at only Rs 10,000 to enable a large number of entities to use these instruments and donate for a social cause.
Meanwhile, the minimum issue size has been fixed at Rs 50 lakh.
On a different note, the Sebi chairperson also said that that by listing NPOs on the social stock exchange platforms, the trust and transparency levels of the listed entities will go up, which will also help in enhancing the donor base and also the investor base.
The five NPOs that made their debut on NSE’s social stock exchange platform on Thursday were SVYM, Transform Rural India, Mukti, Ekalavya Foundation and SGBS Unnati Foundation that raise funds for various causes including education, skill development and women empowerment among other things.