Centre opens new CSR spending route; Zero Coupon Zero Principal instruments on social stock exchange: What this means
The opening of a new CSR funding route through the Social Stock Exchange Framework will mean that companies can now channel part of their CSR spending through ZCZP instruments issued by non profits on the social stock exchange
This week, the Government took a landmark decision to permit subscription to Zero Coupon Zero Principal on the Social Stock Exchange as a Corporate Social Responsibility activity. The opening of a new CSR funding route through the Social Stock Exchange Framework will mean that companies can now channel part of their CSR spending through ZCZP instruments issued by non-profits on the social stock exchange. The move is being billed as the most consequential social sector reform in India in a decade.
What has the Centre done
The Centre has amended the Corporate Social Responsibility (CSR) Rules to allow companies to undertake CSR activities through Zero Coupon Zero Principal (ZCZP) Instruments issued by eligible non-profit organisations registered on Social Stock Exchanges. The Ministry of Corporate Affairs (MCA) notified the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026 through Gazette Notification G.S.R. 415(E) dated May 27, 2026.
When do the rules come into force
The amended rules came into force immediately upon their publication in the Official Gazette. The reform marks a major step towards integrating India’s Social Stock Exchange ecosystem with the country’s CSR framework, creating an additional channel through which corporate entities can support social development projects while ensuring greater transparency and regulatory oversight.
What are ZCZPs
ZCZPs are signature instruments of the Social Stock Exchange. They offer no return to the donor but a transparent, audited and verifiable account of impact. The return is the impact a social project generates and brand building.
What will new rules permit
Under the amended rules, companies will be permitted to carry out CSR activities through ZCZP Instruments issued by Not-for-Profit Organisations (NPOs) that are registered on the Social Stock Exchange segment of a recognised stock exchange in accordance with regulations framed by the Securities and Exchange Board of India (SEBI). To prevent excessive concentration of CSR funds through this route, the government has stipulated that expenditure incurred through such instruments cannot exceed 10 per cent of a company’s total CSR expenditure for a financial year.
No need for impact assessments
In another significant provision, companies subscribing to ZCZP Instruments will be exempt from conducting impact assessments of projects funded through these instruments, a move expected to reduce compliance burdens and encourage greater participation in the Social Stock Exchange framework.
The amended rules also place clear obligations on non-profit organisations raising funds through these instruments.
What NGOs need to do
Non-profits will be required to undertake projects with a duration of not more than three succeeding financial years from the date of issuance of the instrument. Further, any unspent amount remaining upon termination of the instrument’s listing must be transferred to a fund specified under Schedule VII of the Companies Act, 2013, and compliance reports must be submitted to SEBI. The notification additionally incorporates formal definitions of “Not for Profit Organisation” and “Zero Coupon Zero Principal Instrument” into the CSR Rules, aligning the CSR framework with SEBI’s Social Stock Exchange regulations.
What the experts say
R Balasubramaniam, Member, NITI Aayog and Chairman, Social Stock Exchange Advisory Committee of SEBI says that since 2014, India’s larger companies have devoted at least two percent of their profits to social good, today among the world’s largest organised pools of social capital.
Until now, CSR funds could not flow to organisations on the Exchange. The result was a beautifully built bridge with little traffic. This week that gate opened. Subramaniam says the Social Stock Exchange is a regulated marketplace where credible non-profits raise funds with the discipline, disclosure and dignity expected of any listed enterprise. The change means deeper and more stable resources earned through credibility for non-profits. For corporates, the change opens a path from compliance to measurable outcomes. For philanthropists and impact investors, this means standardised, comparable impact data. For citizens, this means a chance to participate in social change through their own demat account.
