CSR implementation in India through Zero Coupon Zero Principal Instruments: Opportunities and Challenges for Public Sector undertakings (PSUs)

Abstract

India's Social Stock Exchange (SSE) is a regulated platform to finance eligible social projects. Not-for-profit organisations (NPOs) can raise funds with Zero Coupon Zero Principal (ZCZP) instruments through it. The planned incorporation of these instruments in the corporate social responsibility (CSR) framework in 2026 opens up new avenues for corporate involvement yet also poses governance and ground-level implementation issues, especially for public sector undertakings (PSUs). The purpose of the study is to explore the doctrinal nature of the regulatory underpinnings, opportunities, and challenges faced by Public Sector Undertaking firms during the process of introducing ZCZP, through a conceptual paper based on doctrinal analysis and thematic synthesis of official guidance and academic literature. Some of the benefits may be increased social project participation, formal disclosures, joint financing, and expert interventions. These barriers encompass impactful CSR project availability, lack of clarity in the project approvals process, due diligence requirements, timing and challenges in social impact measurement for fundraising, and Statutory audit requirements. The paper outlines a new ZCZP governance model, with four stages of regulatory alignment, project screening, approval with subscription, and monitoring. It argues that the instruments of ZCZP should be considered as an additional source of CSR funding, not as a replacement for the traditional mode of implementation. The framework needs to be tested empirically before it can be claimed that there is an impact improvement.