In a bid to cleanse the system of political funding in the country, the Government of India notified the Scheme of Electoral Bonds.
With the issuance of electoral bonds, the donors can purchase electoral bonds from specific State Bank of India (SBI) branches, and receiving political parties can encash them only through a designated bank account.
The electoral bonds are considered as an alternative to cash donations made to political parties, will be available at specified SBI branches for 10 days each in the months of January, April, July and October.
Key highlights of the Scheme of Electoral bonds
The Electoral Bond shall be a bearer instrument in the nature of a Promissory Note (P-notes) and an interest-free banking instrument.
Any citizen of India or a body incorporated in India would be entitled to buy the bond.
Electoral Bonds would be issued in multiples of Rs.1000, Rs.10000, Rs.100000, Rs.1000000 and Rs.1,00,00,000 and can be purchased for any value from this multiple, from the Specified Branches of the State Bank of India (SBI).
The buyers of the Electoral Bond can do so only if they fulfill all the KYC norms.
The Electoral bonds will not carry the name of payee or buyer.
The Electoral bonds would have a life of only 15 days during which it can be used for making a donation to the political parties.
Only those political party would be eligible to receive the electoral bonds who are registered under section 29A of the Representation of the Peoples Act, 1951 (43 of 1951) and secured not less than 1% of the votes polled in the last general election to the House of the People or a Legislative Assembly.
The Electoral Bond Scheme shall be available to buy for a period of 10 days each in the months of January, April, July and October.
What is Electoral Bond?
It is a transparent tool to donate to a political party. The donor can purchase these bonds by making payments digitally or through cheque. Then, the political party for whom the donor has donated can convert these bonds back into cash via their bank accounts.
The bank account used for this transaction must be notified to the Election Commission.
Why is Electoral Bond important?
The idea of the electoral bonds is to make donors to take the banking route to donate, with their identity captured by the issuing authority.
In India, political parties accept the cash donations from anonymous sources, and nearly 70% of the Rs.11,300 crore in party funding over an 11-year period came from anonymous sources, as per the Association for Democratic Reforms (ADR).