SEBI Invites Public Feedback on New Electronic Book Platform for Social Stock Exchange Fundraising

 

Introduction

The Securities and Exchange Board of India (SEBI) has launched a consultation inviting public feedback on its proposed Social Stock Exchange Electronic Book Provider (SSE‑EBP) platform. This initiative is designed to enhance fundraising by not‑for‑profit organisations (NPOs) under the Social Stock Exchange (SSE) model. With the deadline for comments set for July 24, 2025, this article explores the proposal in detail, its benefits, and how stakeholders can contribute their views.

What is the SSE‑EBP Proposal? 🔍

• Objective: Create a dedicated e‑book platform to streamline issuance of Zero‑Coupon Zero‑Principal (ZCZP) instruments and other permitted securities by NPOs via the SSE

• Applicability: Mandatory for NPOs raising ₹50 lakh or more in a single issue or via a "shelf" structure.

• Eligible investors: Includes QIBs (Qualified Institutional Buyers), non‑institutional investors, and retail investors—but excludes foreign portfolio/investor‑backed funds.

Detailed Process Flow

1. Issuance Threshold

Type of Issue	Minimum Amount	Shelf Validity
Single ZCZP issue	₹50 lakh	–
Shelf issues	₹50 lakh/tranche	1 year

2. Preparatory Filings

• NPOs file a Draft Fund‑Raising Document (DFRD) and term sheet at least:

  • 2 working days before the issue (if seasoned issuer)

  • 5 working days for first-time issuers

• Documents detail issue size, bid terms, minimum lot size, allotment method, settlement mode, etc.

3. Platform Onboarding & KYC

• Investors enroll once with SSE‑EBP; enrollment remains valid indefinitely.

• KYC performed via SEBI-registered KRAs; individuals with valid Demat accounts may need only enrollment

4. Bidding Window

• Open Mon–Fri, 9 a.m.–5 p.m., minimum 1-hour window.m.economictimes.com

• Operates as an anonymous pooling mechanism; bids are time-and-size-stamped.

• Allotment follows time‑priority or pro‑rata rule if identical bids occur.

5. Settlement Protocol

• Funds go into escrow; escrow release (T+1 or T+2) as per issuer’s DFRD.

• Non-payment by investors leads to a 30-day debarment, while issuers who withdraw without cause face a 7-day ban.
  
  

Why SEBI's Move Matters

1. Boosts Transparency & Trust

   • Standardizes disclosure and settlement norms.

   • All data, including term sheets and allotments, is centrally accessible.

2. Eases Access for NPOs

   • Simplifies fundraising procedures for social initiatives.

   • Encourages broader investor participation in social impact bonds.

3. Strikes Investor Balance

   • Opens retail and institutional participation, fostering inclusion.

   • Keeps foreign funds out to maintain regulatory clarity and control.

4. Improves Oversight & Accountability

   • Structured KYC and escrow mechanisms enhance reliability.

   • Formally penalizes any defaults, promoting discipline.

Real‑World Example

Suppose EduCare Foundation, an education-focused NPO, plans to raise ₹1 crore via ZCZP bonds.

• They file their DFRD & term sheet 5 days before the issue.

• The issue goes live on SSE‑EBP; investors log in, submit bids anonymously during a 2‑hour window.

• Among ₹1.2 crore worth of bids, allocation is made proportionally.

• Funds are deposited in escrow, and once the issue closes, funds are transferred, confirming credibility.

How to Submit Feedback

• Online: Fill the public consultation form on SEBI’s website by July 24, 2025.

• Email: Send suggestions to consultationcfd@sebi.gov.in with the subject:
  “Comments on Consultation Paper: SSE‑EBP Platform”.

Benefits to the Social Finance Ecosystem

• For NPOs: Faster, regulated fundraising with clear guidelines.

• For Investors: Access to social bonds with full disclosure and protection.

• For SEBI: Streamlined oversight strengthens credibility.

• For Society: Promotes funding towards sustainable development and impactful initiatives.

Practical Tips for Stakeholders

• NPOs: Prepare clear DFRD and term sheets, and schedule filings well ahead.

• Investors: Ensure KYC is updated, enroll in SSE‑EBP, and stay alert to issue announcements.

• Legal/Compliance Teams: Keep an eye on the public consultation and align internal frameworks with the draft circular.

Conclusion

SEBI's proposed SSE‑EBP platform is a strategic step towards formalising social finance in India. By integrating technology, disclosure standards, and structured bidding, it sets the stage for credible and accessible fundraising by NPOs. With the consultation period open till July 24, 2025, stakeholders have a prime opportunity to shape a more inclusive and impactful financial landscape.

FAQs 📌

Q1: Who must use the SSE‑EBP platform?
All NPOs issuing ZCZP or listed instruments of ₹50 lakh or more via SSE must use the new system.

Q2: What instruments are covered?
Primarily ZCZP bonds; SEBI can expand the list of eligible instruments in the future.

Q3: Can foreign investors participate?
No, SEBI has explicitly excluded FPIs and foreign-backed funds.

Q4: Why is escrow mandatory?
To ensure fund security and reassure investors through clear settlement mechanics.

Q5: How to submit feedback to SEBI?
Via SEBI’s online public comment system or email by July 24, 2025.

🔑 Target Keywords

SEBI public consultation, Social Stock Exchange, SSE‑EBP platform, Zero Coupon Zero Principal, NPO fundraising, public feedback SEBI, SEBI draft circular SSE‑EBP