In order to cleanse the system of political funding in the country and in keeping with the government’s desire to move to a cashless economy, Union Finance Minister Arun Jaitley introduced the electoral bonds scheme. The scheme, announced during the 2017 Budget, aims to account the donations made to all major political parties.
What is Electoral Bond?
An electoral bond is designed to be a bearer instrument like a Promissory Note – in effect, it will be similar to a bank note that is payable to the bearer on demand and free of interest. It can be purchased by any citizen of India or a body incorporated in India.
How to use Electoral Bonds?
The bonds will be issued in multiples of Rs1,000, Rs10,000, Rs1 lakh, Rs10 lakh and Rs1 crore and will be available at specified branches of State Bank of India. They can be bought by the donor with a KYC-compliant account. Donors can donate the bonds to their party of choice which can then be cashed in via the party’s verified account within 15 days.
What are the other conditions?
Every party that is registered under section 29A of the Representation of the Peoples Act, 1951 and has secured at least one per cent of the votes polled in the most recent Lok Sabha or State election will be allotted a verified account by the Election Commission of India. Electoral bond transactions can be made only via this account.
The bonds will be available for purchase for a period of 10 days each in the beginning of every quarter, i.e. in January, April, July and October as specified by the Central Government. An additional period of 30 days shall be specified by the Central Government in the year of Lok Sabha elections.
As per the Finance Minister, the electoral bonds will not bear the name of the donor. In essence, the donor and the party details will be available with the bank, but the political party might not be aware of who is the donor. The intention is to ensure that all the donations made to a party will be accounted for in the balance sheets without exposing the donor details to the public.