All You need to know about Electoral Bonds

Govt announces details of electoral bonds for political funding

The Union Government has announced details of electoral bonds for political funding that can be routed by donors to political parties.

REUTERS/Anindito Mukherjee

Background:

• The electoral bonds scheme was announced in Union Budget 2017 with an aim for increasing transparency in political funding. It makes India first country in the world to have such unique bonds for electoral funding.

What are Electoral bonds?

• Electoral bonds will be bearer instrument in nature of promissory note and an interest-free banking instrument.
• These can be redeemed only through the registered accounts of a political party in a prescribed time frame.

Objective:

• It aims at rooting out current system of largely anonymous cash donations made to political parties which lead to generation of black money in the economy.

Denominations: 

• Electoral bonds can be purchased for any value in multiples of Rs.1,000, Rs.10,000, Rs.10 lakh, and Rs.1 crore from any of the specified branches of State Bank of India (SBI).

Who can purchase? 

• A citizen of India or a body incorporated in India will be eligible to purchase the bond.
• The purchaser is allowed to buy electoral bonds only on due fulfilment of all extant KYC norms and by making payment from a bank account. It will not carry the name of the payee.
• In essence, the donor and the party details will be available with the bank, but the political party might not be aware of who the donor is.

Eligibility of Political parties:

• Every party that is registered under section 29A of the Representation of the Peoples Act, 1951 (43 of 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.

Validity: 

• It will have a life of 15 days during which they can be used to make donations to registered political parties.

Availability:

• The electoral bonds will be available for purchase for a period of 10 days each in months of January, April, July and October with additional 30 days to be specified by Central government in year of general election so that this does not become a parallel currency.