SEBI mulls slashing minimum Social Impact Fund investment to ₹1,000; here’s what investors should know

Markets regulator Securities and Exchange Board of India (SEBI) has proposed sharply lowering the minimum investment threshold for individual investors in Social Impact Funds, as part of efforts to widen retail participation in social sector funding.

In a consultation paper issued on Monday, SEBI suggested reducing the minimum value of investment by individual investors in Social Impact Funds (SIFs) to ₹1,000.

Under current rules, individual investors are required to invest at least ₹2 lakh in SIFs that deploy funds exclusively in securities of not-for-profit organisations (NPOs) registered or listed on the Social Stock Exchange (SSE).

SEBI said the proposed reduction aims to bring in line the AIF framework with the minimum application size for Zero Coupon Zero Principal Instruments (ZCZP) under the ICDR regulations, which was lowered to ₹1,000 in March 2025 to boost investor participation.

“The proposed reduction in the minimum value of investment would enable the SIFs to attract small investors to invest in the securities of the NPOs through the SIF,” the paper stated.

Longer registration window for NPOs

SEBI has also proposed extending the registration period for NPOs on the SSE from the existing two years to three years, even if they do not raise funds during that period.

“The SSEAC (Social Stock Exchange Advisory Committee) recommended that in order to address the practical challenges faced by the NPOs, such as delay in renewal of registration under the Income Tax Act, other statutory approvals etc. which may delay the fund raising, the registration period may be further extended by one additional year subject to approval by the SSEs,” the draft circular reads.

The consultation paper also proposes reducing the minimum subscription requirement for issuance of ZCZP instruments to 50% from 75 % for projects where costs and outcomes can be implemented on a clearly identifiable per-unit basis.

The move will ensure that “partial subscription does not adversely affect the project implementation and that the issue proceeds are meaningfully deployed towards the disclosed object/s of the project in the fund raising document,” the draft circular added.

The regulator has invited comments and suggestions from stakeholders on the proposed changes, including the reduction in minimum investment size, extension of registration period for NPOs, and revised subscription norms for ZCZP issuances.