Social Stock Exchanges to get boost from new CSR spending regulations

The Ministry of Corporate Affairs now allows companies to use up to 10% of their CSR funds on Zero Coupon Zero Principal instruments listed on Social Stock Exchanges, a move set to boost funding for non-profits through a regulated platform.

Companies can now deploy up to 10 per cent of their annual Corporate Social Responsibility (CSR) spending through instruments listed on Social Stock Exchanges (SSEs), a move that is expected to boost funding for non-profit organisations and expand social financing through regulated capital market platforms.

The development follows a recent notification by the Ministry of Corporate Affairs (MCA), which amended the Companies (Corporate Social Responsibility Policy) Rules, 2026, allowing companies to undertake CSR activities through Zero Coupon Zero Principal (ZCZP) Instruments listed on Social Stock Exchanges.

NSE Welcomes Move to Boost Social Financing

Welcoming the move, the National Stock Exchange (NSE) said the amendment would enable corporates to channel CSR contributions to eligible not-for-profit organisations (NPOs) registered on the Social Stock Exchange through ZCZP instruments.

According to NSE, the change is expected to strengthen the credibility, transparency and scale of social financing in India by allowing corporates to support impact-led organisations through a regulated and disclosure-driven platform.

Sriram Krishnan, Chief Business Development Officer, NSE, said, "This is a significant step for India's social sector, enabling corporates to deploy CSR funding through a transparent, regulated and impact-driven platform leading to strengthening trust, accountability and access to capital for social enterprises."

Details of the Amended Rules

The MCA notification, which came into force on May 27, allows companies to subscribe to Zero Coupon Zero Principal Instruments issued by NPOs registered with the Social Stock Exchange segment of recognised stock exchanges.

Under the amended rules, expenditure through such instruments cannot exceed 10 per cent of a company's total CSR expenditure for the relevant financial year.

The notification also exempts companies from conducting impact assessments for projects funded through ZCZP instruments. It further requires NPOs issuing these instruments to undertake projects with a duration not exceeding three succeeding financial years from the date of issue.

In addition, any unspent amount remaining after termination of the instrument's listing must be transferred to a fund specified under Schedule VII of the Companies Act, 2013, with a compliance report submitted to the Securities and Exchange Board of India (SEBI).

Expected Impact and Opportunities

NSE said the inclusion of ZCZP instruments as an eligible CSR activity would allow corporates to integrate Social Stock Exchange participation into their CSR strategies, creating opportunities for structured giving, impact measurement, accountability and long-term engagement.

According to the exchange, the amendment is expected to benefit both corporates and the social sector by expanding access to funding for credible and verified NPOs, strengthening governance and disclosure standards, encouraging outcome-driven philanthropy and building greater trust within the social impact ecosystem.

Background of the Social Stock Exchange

The Social Stock Exchange was first proposed by Finance Minister Nirmala Sitharaman in the Union Budget 2019 as a mechanism to channel capital market participation towards social welfare objectives and inclusive growth, NSE noted.

The MCA notification came into effect immediately upon its publication in the Official Gazette.

(ANI)

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