Exchanges are “the backbone of financial markets,” says the World Federation of Exchanges, “central to pricing, capital raising, and risk management globally.” Their efficiencies and network effects have spurred innovation in novel directions, notably as a market solution for climate and social objectives.
Social stock exchanges have launched in several countries, both developed and emerging. The Malaysia Social Exchange began operations this year. India’s Social Stock Exchange (SSE) has a longer track record, operating under Securities and Exchange Board of India (SEBI) authority and embedded within Bombay Stock Exchange and National Stock Exchange infrastructure. Nonprofit organizations and for-profit social enterprises can raise funds subject to mandatory disclosure, standardized key performance indicators (KPIs), and annual SEBI-certified audits. Bengaluru-based SGBS Unnati Foundation was the first to list, in December 2023, raising funds for skills training for underprivileged youth.
The SSE brings “some form of discipline into a diverse sector which otherwise does not exist,” said Sreevas Sahasranamam, professor of international business and entrepreneurship at the University of Glasgow’s Adam Smith Business School, and co-author of an analysis published in March by the World Economic Forum. “When it comes to measurement and metrics, there is still an open ‘black box’ in some way.”
Sahasranamam and Jyotsna Sitling of SEBI’s SSE advisory committee concluded that the “model shows an alternate finance pathway embedded in public design, market infrastructure and social mission. The next step is to scale this up, particularly by broadening retail donor participation and deepening data capture and verification as volumes grow . . . This is not only beginning to mobilize more capital for underserved communities at home, but also offers a template for other countries to integrate impact into their capital market structure.”
Sahasranamam situates the SSE’s value proposition around two interconnected problems.
The first is metrics. Social outcomes – for instance, gender empowerment, educational attainment, poverty reduction, and health improvements – tend to elude the kind of revenue and return metrics that analysts conventionally apply. The SSE framework, which is self-regulatory and aligned with the UN Sustainable Development Goals (SDGs), requires listed organizations to articulate a logic model upfront: inputs, activities, outputs, and outcomes. Annual Social Impact Reports track performance against the committed KPIs.
Prof. Sreevas Sahasranamam
“It is not the most structured way to capture impact,” the Glasgow professor said of conventional philanthropic reporting. “And when SSE is trying to bring other types of structures in place, not everybody might be gung-ho about it on day one.”
For this, the SSE has announced a Rs. 100 crore (about $10.6 million) capacity building fund, which Sahasranamam said entails government entities working with nonprofits to help them understand and acclimatize to the new structure.
“In due course, I expect the [social] sector to get upgraded, to start being comfortable with monitoring and parameters. It really needs structure to be brought in, and the capacity building fund will help the structure hopefully become easier for people to engage with.”
The second problem cited by Sahasranamam is the nature of capital itself. Social enterprises often need funding for longer than the five-year exit timeline of a typical venture fund. The SSE creates space for that by introducing novel instruments, most notably the Zero Coupon Zero Principal (ZCZP) bond, which allows non-profits to raise capital without any obligation to return principal or pay interest.
In 2024, the nonprofit Swades Foundation used a ZCZP to raise approximately $1.1 million for sustainable livelihood projects. SEBI has since lowered the minimum investment threshold to around $10 In hopes of broadening retail participation.
Research institutions and social sector organizations similarly need “patient capital, because social outcomes don’t work within VC timelines,” Sahasranamam observed. The SSE architecture may accommodate both.
The Anusandhan National Research Foundation, India’s premier science funding body, was reported this year to be exploring an SSE listing.
Furthermore, in April, SEBI extended the registration window for nonprofit organizations by a year, to three years, and reduced the minimum subscription threshold for ZCZP instruments to 50% from 75%, citing smaller organizations’ challenges with statutory approvals – the latest in a series of calibrations as the exchange finds its footing.
The possibility of an Indian social stock exchange was first mentioned in the 2019-20 budget proposal. Finance Minister Nirmala Sitharaman said it would be “for listing social enterprises and voluntary organizations working for the realization of a social welfare objective so that they can raise capital as equity, debt or as units like a mutual fund.”
Samir Shah, who was involved with the SEBI working group during drafting of the SSE regulations, said the intent was to create market infrastructure to attract larger social capital – including philanthropic and corporate social responsibility (CSR).
Shah described the fundamental purpose as a scaling mechanism for capital that is locked into bespoke relationships.
Samir Shah
“The current way in which NGOs raise money is very bespoke and depends on the trust and credibility of the individual founder,” said Shah, executive vice-chair and co-founder of Chennai-based Dvara Holdings. He believes that a focus “on the project, transparent information disclosure, impact assessments, all communicated [to investors] via stock exchange infrastructure governed by SEBI” would make capital-raising more scalable.
Shah pointed to a distinction between the SSE model and philanthropic or CSR funding: The latter tends to be “programmatic,” renewed annually dependent on tight funder-grantee relationships.
The SSE can be more tangible and structural – continuous, institutionally anchored capital directed toward outcomes rather than relationships.
In Sahasranamam’s view, a venture capital firm may discipline portfolio companies through rigorous upfront due diligence and exit planning to optimize realization of value. The SSE, he maintained, weaves in both: The KPI framework and logic model requirements function as due diligence, while the project-specific timelines embedded in ZCZP instruments and social impact bonds function as a version of exit planning. That is not exit in the financial sense, but accountability to a defined endpoint.
It is still premature to make a comment on effectiveness,” Sahasranamam said. “We do need a certain degree of sample size.”
Social exchange advocates had hoped for faster progress. Compliance requirements, particularly the disclosure obligations, have proven burdensome for organizations not accustomed to formal reporting. And while retail participation is possible, in practice, the SSE has so far been predominantly the domain of institutional investors and larger social organizations.
Shah identified “over-regulation” as the primary near-term risk, one that could “kill the initiative” in its formative stage.
“Regulation needs to be lightweight, super agile, constantly fine-tuned as the early experiments unfold, and then stabilize regulations over the medium to long term,” Shah suggested.
Sahasranamam is concerned about the market’s monitoring and control mechanisms’ scaling up for the longer term.
“It’s very easy to say things are working with five people and 10 people,” he said. “How do you scale it to thousands? There has to be a very strong parallel track of the volume of money going up and the volume of people who audit and track going up, hand-in-hand. Without that, risk mitigation and monitoring can’t happen.”
Social exchange markets elsewhere include Singapore’s Impact Investment Exchange (IIX), and the Jamaica Social Stock Exchange (JSSE). A 2025 research paper on social exchange funding dynamics also mentioned active platforms in Canada, the U.K. and U.S.
India’s is distinctive in terms of its contemplated scale, population served, and regulatory embedding.
Sahasranamam sees replication beyond India happening gradually, and more through peer learning than top-down policy. He noted how India’s Unified Payments Interface (UPI) spread to Sri Lanka, where it is branded as LankaPay.
“I would expect more Global South-type countries to replicate” SSE, he said, with Southeast Asian nations as the most likely adopters.
At the G20 level, where Sahasranamam has served as a co-chair on sustainability policy, he has seen cross-border impact investment ideas floated but not carried forward as annual G20 presidencies shift priorities.
Said Shah: “Success will be when large-scale CSR money and philanthropic capital – including [from] normal, not just high-net-worth, givers – is unlocked systematically to provide uninterrupted capital, so that NGOs and for-profit social impact organizations can deliver population-scale SDG outcomes over the medium to long term.”