Electoral bonds scrapped by Supreme Court: How purchasers can claim refunds now

The Supreme Court in a landmark judgment on Thursday scrapped the very popular electoral bonds scheme floated by the Narendra Modi-led government in 2018. The bonds, which allowed anonymous funding to political parties, was introduced as a viable alternative to cash donations to political parties in a bid to bring in transparency in political funding.

The SC on Thursday asked the only issuing bank, State Bank Of India (SBI), to immediately stop the issuance of electoral bonds. The top court also issued a host of directions to the SBI on furnishing details of the electoral bonds to the Election Commission of India (ECI).

The apex court added that those electoral bonds that have not been encashed by the political parties have to be returned to the purchaser.

The court noted electoral bonds within the validity period of 15 days, yet not encashed by political parties, must be returned by the parties to the purchaser. The SBI then has to refund the amount to the purchaser's bank account.

What are Electoral Bonds?

Electoral bonds were introduced as financial tools, modelled as promissory or bearer bonds. These distinctive bonds, acquired either by individual citizens or corporate entities in India, were primarily designated for channeling monetary contributions toward political organisations. The issuance of these bonds was with the State Bank of India (SBI), with their purchase value ranging from Rs 1,000 to Rs 1 crore, demarcated in increasing multiples.

Pertaining to prospective bondholders' eligibility criteria; Indian nationals or legally constituted entities operating on Indian soil are deemed eligible. Accessibility to purchase these bonds will be granted within specified 10-day windows scheduled quarterly each year – i.e., January, April, July and October respectively. This period is dictated and publicly announced via government-center directives.

How to claim refunds?

In reference to the directive provided by the Supreme Court, individuals who have procured electoral bonds in the last 15 days, may approach the specified State Bank of India branch where the aforementioned bonds were initially secured.

Subsequently, they are entitled to solicit a refund given that funds typically undergo transferal to their respective political parties within this set period.

Last month,  the Ministry of Finance said the State Bank of India (SBI) has been authorised to issue and encash electoral bonds through its 29 branches from January 2 to January 11.

Also read: Electoral bonds: Supreme Court asks State Bank of India to stop issuing them ‘immediately’

Also read: 'Bad judgement, parties will go back to black money route,' says ex-Infosys CFO as SC strikes down electoral bonds