Electoral bonds

  • The Supreme Court flagged the possibility of misuse of money received by political parties through electoral bonds for ulterior objects like funding terror or violent protests.

ELECTORAL BONDS

  • Electoral Bond is a financial instrument for making donations to political parties.
  • The system of electoral bonds was announced in the 2017 Union Budget.
  • The bonds are issued in multiples of Rs. 1,000, Rs. 10,000, Rs. 1 lakh, Rs. 10 lakh and Rs. 1 crore without any maximum limit.
  • State Bank of India is authorised to issue and encash these bonds, which are valid for fifteen days from the date of issuance.
  • Donors can purchase and subsequently donate the bonds to their party of choice, which the party can then cash through its verified account within 15 days.
  • The bonds are available for purchase by any person (who is a citizen of India or incorporated or established in India) for a period of ten days each in the months of January, April, July and October as may be specified by the Central Government.
  • A person being an individual can buy bonds, either singly or jointly with other individuals.
  • Donor’s name is not mentioned on the bond. 

GOVERNMENT'S ARGUMENTS

  • Government advocate following advantages of electoral bonds:

  1. Promote transparency in funding and donation received by political parties. 
  2. The scheme envisages building a system of acquiring bonds with validated KYC and an audit trail. 
  3. A limited window and a very short maturity period would make misuse improbable.

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