In a bid to curb influence of illicit cash in Indian political system, the Finance Ministry today notified the contours of new electoral bonds. Announced during the last Budget session, these bonds will now be the only way to make donations to political parties.
Donors will be able to purchase these bonds through specified branches of the State Bank of India. The bonds will be available for purchase for a period of 10 days in the months of January, April, July, and October. This period will be extended to 30 days in the year general elections are to be held.
On the notification of electoral bonds, Finance Minister Arun Jaitley said that only a citizen of India or a body incorporated in India will be eligible to purchase the bond. Although no limit has been imposed on the value of bonds that can be bought, donors will have to purchase them in multiples of Rs 1,000, Rs 10,0000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore, he said in statement in the Lok Sabha.
Although called a bond, they will be interest-free debt instruments that resemble promissory notes where the SBI will be the custodian of the donor's funds until the political parties are paid.
The electoral bonds will have to be encashed within 15 days or their issuance through a designated bank account of the receiver. Also, The donations through electoral bonds could only go to registered political parties.
Jaitley also clarified that the name of the payee will not appear on the bearer instrument, the amount being paid has to be declared though. The donors will have to make KYC disclosures to SBI.
FM @arunjaitley : Govt has today presented before the Parliament the Electoral Bonds scheme. The scheme will be notified today. In 2017-18 Budget speech, Electora Bond scheme was announced to clean the system of political funding in the country- Ministry of Finance (@FinMinIndia) January 2, 2018
During the last Budget session, Jaitley had announced electoral bonds, along with a ban on cash donations above Rs 2,000 to political parties. These steps were intended to clean the political funding in the country.
In this announcement last year in February, the Finance Minister had announced that political donors could purhcase these electoral bonds againsyt cheque or digital payments. Passing political funding through the banking system is meant to help make it tracebale.