Mumbai, April 20 (NationPress) The Securities and Exchange Board of India (SEBI) has significantly reduced the minimum investment threshold for individual investors in social impact funds to just Rs 1,000. This change aims to facilitate greater retail participation on the Social Stock Exchange (SSE), lowering the previous requirement of Rs 2 lakh.

This new minimum of Rs 1,000 allows smaller investors to engage with Social Impact Funds (SIFs), categorized as Alternative Investment Funds (AIFs) that focus on social or environmental outcomes.

To implement this adjustment, SEBI has revised its AIF regulations, aligning the minimum application size for zero-coupon, zero-principal instruments with the new investment limit for individual investors in the Social Impact Fund.

This initiative is designed to enhance capital flow towards Not-for-Profit Organisations (NPOs) and social enterprises listed on both the NSE and BSE Social Stock Exchange.

By decreasing the entry barrier, SEBI aims to transform impact investing into a more accessible space, akin to retail equity investing, thereby encouraging more participation in supporting social causes. This initiative is part of SEBI's broader strategy to fortify the SSE ecosystem, which includes simplifying registration processes for NPOs.

Additionally, SEBI indicated that AIFs that do not retain funds post their fund life may apply for an "inoperative" status, contingent upon adherence to specified norms.

According to a SEBI statement, "An Alternative Investment Fund may be classified as an inoperative fund, following the guidelines set by the Board as necessary." This decision is based on the notion that while entry into the securities market is governed by certain eligibility criteria, the exit framework should remain clear, reliable, and operationally efficient.

Previously, SEBI had also extended the registration validity for not-for-profit organizations on the SSE, now allowing their status as NPOs for three years without the need to raise funds, and reducing the minimum subscription requirement for issuing zero-coupon, zero-principal instruments.

The registration validity period has been extended to three years from the prior two, during which NPOs can maintain their registration on the SSE without fundraising.

Furthermore, SEBI has cut the minimum subscription requirement for zero-coupon, zero-principal instruments to 50% from 75%, enhancing fundraising flexibility for NPOs.

This relaxation applies solely to projects where costs and outcomes can be distinctly implemented on a per-unit basis, ensuring that partial subscriptions do not disrupt project execution, as stated by SEBI.