Zero coupon, zero principal bond declared by Govt as securities

The government has designated “zero coupon zero principal instruments” as securities in preparation for the creation of a social stock exchange. A Not for Profit Organization (NPO) that will be registered with the social stock exchange segment of a recognised stock exchange will issue a zero coupon, zero principal instrument. According to a formal announcement released on Friday, the Securities and Exchange Board of India (Sebi) will establish the laws that would apply to these instruments.

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KEY POINTS:

• The Social Stock Exchange (SSE), a revolutionary idea in India, aims to benefit private and nonprofit sector providers by increasing their access to money.
• Nirmala Sitharaman, the finance minister, proposed the concept in her Budget Speech for 2019–20.
• SSE will be a distinct division of the current stock markets.
• According to the notification, “zero coupon zero principal instruments” have been designated as securities for the purposes of the Securities Contracts (Regulation) Act, 1956.
• Sebi’s board approved a framework for SSE for social businesses to raise money in September 2021.
• The recommendations of a working group and technical group assembled by the regulator served as the foundation for the development of the SSE framework.

Important Takeaways For All Competitive Exams:

• Finance minister, Govt of India: Nirmala Sitharaman

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