What Are Zero Coupon Zero Principal Bonds?

SGBS Unnati Foundation, a not-for-profit organisation (NPO) made history in December 13, 2023 as the first entity to be listed on the National Stock Exchange’s (NSE) Social Stock Exchange (SSE)  with the issuance of zero coupon zero principal (ZCZP) bonds worth Rs 2 crore. ZCZP bonds differ from usual bonds as they contribute towards a social cause. These bonds are not for investment but are meant for charity as they do not generate any financial gain for the investor like other usual bonds. There is no tax imposed on the purchase of these bonds. So, why opt for these over direct donations to organisations? How do they work? ZCZP bonds are issued on SSE, a platform that enables social businesses and NPOs to raise funds from investors who want to invest money towards a social cause. NPOs can issue ZCZP bonds with a total issue size starting from Rs 50 lakh, and individuals...