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Mumbai, February 10 :
The Securities and Exchange Board of India (SEBI) has proposed a major reduction in the minimum investment amount for individual investors in Social Impact Funds (SIFs). The move aims to boost participation in social investing and strengthen the Social Stock Exchange (SSE) framework.
In a consultation paper released on Monday for public comments, SEBI said it has proposed reducing the minimum investment in Social Impact Funds from Rs 2 lakh to Rs 1,000.
SEBI Proposal to Encourage Retail Participation
SEBI stated that the proposal was made after deliberations with the Social Stock Exchange Advisory Committee (SSEAC).
Additionally, the regulator believes this step will allow more retail investors to contribute towards social enterprises.
“It is proposed to reduce the minimum value of investment by individual investors in SIFs from rupees two lakh to rupees one thousand,” SEBI said.
What Are Social Impact Funds (SIFs)?
A Social Impact Fund (SIF) is a SEBI-regulated, privately pooled investment vehicle that invests in social ventures.
For example, these ventures may include:
- Not-for-profit organisations (NPOs)
- For-profit social enterprises
Importantly, these funds aim to solve social challenges such as poverty, healthcare gaps, and education needs, while also generating measurable social impact.
Current Rule: Rs 2 Lakh Minimum Investment
Under the existing SEBI (Alternative Investment Funds) Regulations, 2012, an individual investor must invest a minimum of Rs 2 lakh in a Social Impact Fund.
However, SEBI noted that this high investment requirement limits participation from small investors.
Therefore, the regulator has proposed a reduction to make such investments more accessible.
Alignment with ZCZP Minimum Application Size
SEBI explained that the proposed change is intended to align the minimum investment requirement under AIF rules with the minimum application size for Zero Coupon Zero Principal Instruments (ZCZP).
Notably, the minimum application size for ZCZP is currently Rs 1,000, effective from March 19, 2025.
As a result, SEBI expects greater participation and improved funding support for social ventures through SIFs.
Other Changes Proposed by SEBI
Apart from lowering the minimum investment in SIFs, SEBI has also proposed additional reforms.
In addition, these reforms are aimed at strengthening the Social Stock Exchange framework further.
1. Extension of NPO Registration Period
Currently, NPOs can remain registered on the Social Stock Exchange for a maximum of two years without raising funds.
Meanwhile, SEBI has proposed extending this period by one additional year, subject to approval by the Social Stock Exchanges.
This is because many NPOs face practical challenges such as delays in statutory approvals.
2. Lower Minimum Subscription for ZCZP
Further, SEBI has proposed reducing the minimum subscription requirement for issuance of ZCZP from 75% to 50% in specific cases.
Consequently, fundraising could become smoother for NPOs where project costs and outcomes can be allocated proportionately.
SEBI Invites Public Comments
SEBI has invited public feedback on the proposed changes.
Finally, the regulator said the suggestions received will be reviewed before finalising amendments.
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