The true growth of a nation is marked by its social development and as a developing country, social impact investment is the need of the hour in India. Back in 2015, economic surveys indicated that social expenditure was only 6.7% of GDP and India ranked at 102 among 135 nations on the Social Progress Index At that time, a number of truly revolutionary organisations had taken up the challenge to invest their capital into brilliant social and environmental initiatives that were set to transform the country’s socio-economic growth. Led by Rana Kapoor, Yes Bank had also recognised this need and thus, spearheaded the social impact investing scene in India. He had laid down few measures which will help promote this idea:
Encouraging Social Finance
With the immense need for development, institutions across the world have emerged to encourage and invest in social finance. Rana Kapoor said “The United States has passed the Social Impact Bond Act, following which the Secretary of the Treasury actively seeks social impact bond project proposals from states or local governments. The UK has also offered a 30% the Social Investment Tax Relief (SITR) for those investing in social finance. Such initiatives need to be implemented in India as well, to encourage investment”.
Bringing Early-Stage Development And Venture Financing Closer
Impact investment is achieved when the gap between early-stage development and venture financing is lesser. The Cabinet Office of the UK has launched £10 million worth Investment and Contract Readiness Fund (ICRF) in 2012 for building social enterprises’ capacity. In this essence, Rana Kapoor, via Yes Bank, had contributed to social development by supporting businesses and investing in scalability, thereby opening opportunities for investors.
Defining Measuring Standards
The Big Society Capital of the UK has launched an outcomes matrix to define and set clear evaluation standards for social investment financial intermediaries and social enterprises to have a framework of the outcome they can deliver. Standardisation of the marketplace is of utmost necessity in a diverse country like India. Not only does it set measuring standards, it also builds credibility and provides an incentive to investors. The need of the hour is a quality knowledge and resource centre to offer information and set evaluation yardstick for the impact investing market.
Bringing social venture funds under CSR
Indian government at that time allowed a minimum of 2% towards Corporate Social Responsibility (CSR) funds. Rana Kapoor said, “By expanding the scope of CSR to include investments in Social Venture Funds (SVFs), it could bring the necessary push to encourage investors to put their money in social finance. It also helps in building credibility, and thus confidence in the impact marketplace”. Social Venture Funds are the pillar of a global sustainability ecosystem, bringing them under the CSR umbrella could play a key role in establishing India as a hub for impact investment.
Creating a National Social Entrepreneurship Institute
The European Union has set up the Social Entrepreneurship Network (SEN) with hand-picked managing authorities of the European Social Fund and social enterprise organizations, every member representing the nine European Union countries participating in the venture to promote social enterprises. India needs a similar National Social Entrepreneurship Institute (NSIN) with latest tools, technology and resources for learning and mentorship, along with commercialisation of viable business models. Rana Kapoor, visionary CEO of Yes Bank, explained that it will bring together social incubators, collaborators, mentors and partners for social entrepreneurs.
Launching Social Start-Up Platform
India needs an efficient Social-Startup platform, much like the UK’s Tech4Startup, Marketing4Startup or Finance4Startup, which have been instrumental in attracting quite a bit of social development revenue. Such a platform will serve as a space for aspiring social entrepreneurs to showcase their business models, bounce off ideas and seek inspiration, as well as to connect with investors, policymakers and VCs. Creating such platform can bring about the demand for the impact investing market and bring forth viable and quality social enterprises that are worth investing in.
Rana Kapoor believed India can have a significant impact and touch a billion lives by exposing the wide range of prospects in the field of impact investing. In that light, Yes Foundation, Yes Bank’s social development arm, was formed to create a more empowered and equal India. Founded in December of 2012, the Foundation’s aim is to enable MSMEs to integrate sustainability into their operations, reduce overall carbon footprint and improve their occupational health and safety systems. Under this, the capacity building initiative has benefited more than 5000 MSMEs through multifaced interventions including workshops on promoting energy efficiency, clean technology, energy audits, financial literacy camps, and first-aid and safety trainings. Employability, incubating micro enterprises, and promoting nano enterprises, Yes Foundation strives to strengthen rural and local economies.
