The potential demand for such instruments is not a concern. The Companies Act mandates that at least 2 per cent of average net profits recorded during the preceding three financial years should be set aside for CSR projects. This has resulted in more than ₹30,000 crore being available every year for projects linked to education, health, environment sustainability, rural development and so on. Under the new rules, companies in search of credible organisations or projects to spend their funds can buy into ZCZP bonds on social stock exchanges. Unspent CSR funds of BSE 200 companies had amounted to ₹1,920 crore in FY25 and ₹1,708 crore in FY24.
But the supply of investible instruments must pick up. Recently, SEBI had allowed non-profits to remain registered with exchanges even if they do not make any issuances for three years, extending the timeline from two years earlier. SEBI had also reduced minimum subscription in ZCZP issuances from 75 per cent to 50 per cent. But besides these, SEBI must review the rules it has set out for non-profits — regarding eligibility criteria, annual disclosures, annual spends, audits and annual impact disclosures. In a bid to enhance credibility and transparency, SEBI may have laid down rules that are too onerous for small non-profits. Smaller non-profits in genuine need for funds are possibly discouraged from approaching this platform. A discussion with registered non-profits on their hardships could lead the way for another constructive set of reforms.
