SEBI to Take Measures to Boost Investments in Social Venture Funds

Social Issues Social Inequalities and exclusion

Posted by NewAdmin on 2025-01-24 06:19:01 |

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The Securities and Exchange Board of India (SEBI) is actively exploring strategies to enhance investments in social venture funds (SVFs), a crucial step toward fostering financial support for social impact initiatives. SVFs play a pivotal role in addressing societal challenges by channeling funds toward projects that deliver measurable social or environmental benefits. Despite their potential, the growth of SVFs in India has been constrained, with only 14 such funds established so far, collectively attracting a modest investment of ₹578 crore.

One of the primary hurdles to the expansion of SVFs is the restrictive regulatory framework, which limits investments to "not-for-profit" entities. While this stipulation ensures that funds are directed toward socially beneficial causes, it also narrows the pool of potential investees, discouraging investors who seek scalable and sustainable returns alongside social impact. This limitation has hindered the broader adoption of SVFs and their ability to attract diverse funding sources.

Recognizing these challenges, SEBI is now evaluating measures to create a more enabling ecosystem for SVFs. This may involve revisiting existing regulations to allow investments in for-profit social enterprises, provided they adhere to strict guidelines to maintain their focus on impact. Additionally, SEBI could introduce incentives for investors, such as tax benefits or relaxed compliance norms, to make SVFs a more attractive investment avenue.

By taking proactive steps to address these barriers, SEBI aims to unlock the full potential of SVFs, enabling them to support innovative solutions in areas like healthcare, education, renewable energy, and financial inclusion. Strengthening the SVF ecosystem is not just about boosting investments but also about empowering India's social sector to achieve transformative outcomes for communities in need.

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