In a significant step toward deepening the role of capital markets in the social sector, the Securities and Exchange Board of India (SEBI) has issued a draft circular dated July 3, 2025, proposing the launch of a dedicated Electronic Book Provider (EBP) platform for the Social Stock Exchange (SSE). This move aims to streamline fundraising by Not-for-Profit Organisations (NPOs) through enhanced transparency, efficiency, and accessibility.
1. Background: Bridging Capital Markets and Social Good
The Social Stock Exchange (SSE), introduced in India as a novel framework to mobilize capital for social development initiatives, allows NPOs to raise funds using instruments such as Zero Coupon Zero Principal (ZCZP) instruments. However, till now, the ecosystem lacked a centralised, regulated mechanism for such fundraising.
SEBI’s new proposal for an SSE-EBP platform seeks to fill that gap by offering a common bidding and settlement infrastructure—similar in structure to the electronic book building system used in debt markets.
2. Key Highlights of the Proposed SSE-EBP Platform
a. Applicability
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Mandatory Use: NPOs intending to raise ₹50 lakh or more (either in a single issue or through a shelf prospectus) must route their fundraising through the SSE-EBP platform.
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The regulation aims to ensure greater discipline, standardization, and investor protection in large-value issues.
b. Eligible Participants
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The platform is open to Qualified Institutional Buyers (QIBs), non-institutional investors, and retail investors.
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Excluded Categories: Notably, Foreign Portfolio Investors (FPIs), foreign funds, and foreign investor-backed funds are prohibited from participating—likely due to regulatory constraints and currency control mechanisms impacting NPO funding.
c. Bidding Process & Timelines
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Bidding Window: Open from 9:00 am to 5:00 pm on working days of recognised stock exchanges.
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The issuer must inform the SSE-EBP of the potential investor list at least one hour before bidding starts.
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Customised Bidding Period: The issuer defines the exact window of bidding via an official bidding announcement.
d. Documentation Requirements
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Issuers must submit:
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A Draft Fund Raising Document (DFRD), and
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A Term Sheet detailing:
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Issue size,
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Minimum application size,
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Bidding terms,
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Allotment method.
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Timelines for Submission:
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2 working days before issue opening (for repeat issuers),
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5 working days in advance (for first-time issuers).
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3. Accountability Mechanisms: Penalty for Unwarranted Withdrawal
To ensure issue discipline, the circular proposes temporary debarment (7 days) for issuers who withdraw after listing, except under two exceptions:
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The issue fails to attract at least 75% subscription, or
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Investor payment defaults occur post-bidding.
This clause reflects SEBI’s intent to prevent speculative or unserious issuances that could hurt investor sentiment and platform credibility.
4. Implications for the Sector
| Stakeholder | Implication |
|---|---|
| NPOs | Gain access to a formalised, regulated marketplace for large-scale fundraising. |
| Investors | Access to verified issue documents, transparent bidding, and enhanced governance. |
| SSE Ecosystem | Evolution toward market-standard infrastructure matching debt and equity markets. |
5. Way Forward: Call for Comments and Future Outlook
The draft circular is open for public comments, allowing stakeholders to shape the final contours of the SSE-EBP framework. Comments can be submitted to SEBI by referencing the draft circular dated 03.07.2025, accessible via SEBI’s official website.
This move is another pivotal step toward mainstreaming social finance, offering regulatory clarity and operational structure that could transform how the Indian philanthropic sector interacts with capital markets.
Conclusion: Strengthening the Backbone of Social Capital Markets
With this draft proposal, SEBI has reaffirmed its commitment to fostering responsible innovation in financial markets. The SSE-EBP platform, when finalised, will likely emerge as a game-changer for not-for-profits, enabling them to scale social impact projects by tapping into structured capital mechanisms—without compromising on transparency or governance.
As India moves into a new era of impact-linked finance, the SSE-EBP could become the institutional gateway for trust-based, mission-driven fundraising on a national scale.
