Government declares zero-coupon, zero-principal instruments as securities

The government on July 16 declared the so-called zero-coupon, zero-principal instruments as securities that can be listed on particular exchanges.

According to the gazette notification, “zero coupon zero principal instrument” is an instrument issued by a not-for-profit organisation that will be registered with the social stock exchange segment of a recognised stock exchange in accordance with the Securities and Exchange Board of India (Sebi) regulations.

What are ‘zero-coupon, zero-principal’ instruments?

These are financial instruments that any non-profit organisation can use to raise funds.

Usually, such organisations raise money through donations from individuals or corporates. Now, they can issue a zero-coupon, zero-principal security through a social stock exchange (SSE) and those willing to donate money to their cause can buy these securities.