Electoral bonds have been introduced to promote transparency in funding and donation received by political parties, the government told the Supreme Court on recently.
The government was responding to a petition filed by the CPI(M) and party secretary general Sitaram Yechury to strike down the ‘Electoral Bond Scheme 2018’ and amendments in the Finance Act, 2017, which allow for “unlimited donations from individuals and foreign companies to political parties without any record of the sources of funding.”
What is it?
- Electoral Bond is a bearer Banking Instrument to be used for funding eligible Political Parties.
- An eligible Political Party is the one registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951) and secured not less than one per cent of the votes polled in the last General Election to the House of the People or the Legislative Assembly.
Who can purchase Electoral Bonds?
The Electoral Bonds under this Scheme may be purchased by a Person, who is a Citizen of India or Incorporated or Established in India. The definition of “Person” includes-
- an Individual;
- a Hindu Undivided Family
- a Company
- a Firm
- an Association of Persons or a Body of Individuals, whether incorporated or not
- every Artificial Juridical Person, not falling within any of the preceding sub-clauses
- any Agency, Office or Branch owned or controlled by such person.
How it works ?
- The bonds will be issued in multiples of ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh and ₹1 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.
- They can be encashed by an eligible political party only through their accounts with authorised banks.
- The bonds do not have the name of the donor or the receiving political party and only carry unique hidden alphanumeric serial numbers as an in-built security feature.