Zero coupon, zero principal bond

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• Recently, the Finance Ministry has declared zero coupon zero principal instruments (ZCZP) as securities for the purposes of the Securities Contracts (Regulation) Act, 1956.

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• It will help many organisations including corporates to utilise their fund marked for social responsibility and also help non-profit organisations to get funds in a more transparent manner. 

Zero coupon Zero principal instrument 

• Zero coupon zero principal instrument means an instrument issued by a Not for Profit Organisation (NPO) which will be registered with the Social Stock Exchange (SSE) segment of a recognised stock exchange.
  • The Social Stock Exchange (SSE) is a novel concept in India and such a bourse is meant to serve private and non-profit sector providers by channelling greater capital to them. 
  • The idea was floated by Finance Minister Nirmala Sitharaman in her Budget Speech 2019-20.
    • SSE will be a separate segment of the existing stock exchanges.
    • Social enterprises eligible to participate in the SSE should be entities — NPOs and for-profit social enterprises — having social intent and impact as their primary goal.
• These instruments will be governed by rules made by the Securities and Exchange Board of India (Sebi)

Source:ET