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CS Professional · CSR and Social Governance · Social Governance

Vikas Gram Trust, an NPO, wishes to mobilise funds from donors through a social impact fund for its projects. A trustee says funds must always be registered as ordinary mutual funds. Which alternative statement correctly reflects the SSE framework?

Social Impact Funds can be set up as a category of alternative investment fund regulated by SEBI, with relaxed corpus and minimum investment thresholds to direct capital to social enterprises. They are not ordinary mutual funds, are not RBI-run, and do require registration.

  1. ASocial Impact Funds can be set up as a category of alternative investment funds under SEBI, with a corpus lower than a typical AIF and a minimum investment suited to social purposesCorrect
  2. BSocial Impact Funds are banned from investing in NPOs
  3. CSocial Impact Funds must be set up only by the RBI
  4. DSocial Impact Funds have no regulatory framework and need no registration

Explanation

SEBI created Social Impact Funds as a sub-category of Alternative Investment Fund Category I (social venture funds), with relaxed corpus and investment thresholds to channel capital to social enterprises. They are regulated by SEBI, not the RBI, and are not barred from investing in NPOs.

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