The Securities and Exchange Board of India has reduced the minimum investment amount for social impact funds to just Rs 1000, down sharply from the earlier threshold of Rs 2 lakh. The move is aimed at making the Social Stock Exchange (SSE) more accessible to individual investors.
With this change, Sebi has aligned the minimum application size for subscribing to Zero Coupon Zero Principal (ZCZP) instruments under its Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018, with the revised investment requirement for social impact funds.
Previously, under Alternative Investment Fund (AIF) regulations, individual investors were required to commit at least Rs 2 lakh to participate in social impact funds that invest in securities issued by not-for-profit organisations (NPOs) listed or registered on the SSE. However, as per Sebi’s notification dated April 16, this barrier has now been significantly lowered to Rs 1,000.
To implement the change, the regulator has amended its AIF rules, marking a clear shift towards inclusivity in impact investing.
In another key development, Sebi introduced provisions allowing certain AIFs to be classified as ‘inoperative funds.’ This status can be granted to funds that have completed their lifecycle and do not retain any investor capital, subject to conditions laid down by the regulator. The aim is to create a smoother and more transparent exit framework for such entities.
According to Sebi, while entry into the securities market is governed by defined eligibility norms, the exit process should be equally structured, predictable, and efficient from an operational standpoint.
The regulator has also taken steps to support not-for-profit organisations on the SSE. It has extended the registration validity period for NPOs from two years to three years, allowing them to remain listed without necessarily raising funds during that period.
The regulator clarified that this relaxation would apply only to projects where costs and deliverables can be clearly defined per unit, ensuring that partial funding does not hinder execution.
Separately, Sebi has also issued amendments related to regulations governing Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), indicating a broader regulatory overhaul across investment structures.
