Electoral bonds for political donations notified 

Electoral bonds for political donations notified 

Context

Union Finance Minister Arun Jaitley on Tuesday outlined the basic contours of the electoral bonds scheme announced during the 2017 Budget, including their denominations, validity, and eligibility of the purchasers.

Electoral bonds will allow donors to remain anonymous and pay political parties using banks as intermediaries.

• Electoral bonds would be a bearer instrument in the nature of a promissory note and an interest-free banking instrument
• A citizen of India or a body incorporated in India will be eligible to purchase the bond.

KYC norms

• Electoral bonds can be purchased for any value in multiples of ₹1,000, ₹10,000, ₹10 lakh, and ₹1 crore from any of the specified branches of the State Bank of India.
• The purchaser will be allowed to buy electoral bonds only on due fulfilment of all the extant KYC norms and by making payment from a bank account
• It will not carry the name of the payee.

To increase transparency in political funding

• The bonds, aimed at increasing transparency in political funding, will have a life of 15 days during which they can be used to make donations to registered political parties that have secured not less than 1% of the votes polled in the last election to the Lok Sabha or Assembly.
• The bonds shall be available for purchase for a period of 10 days each in the months of January, April, July and October, with an additional 30 days to be specified by the Central government in the year of a general election.
• The bond shall be encashed by an eligible political party only through a designated bank account with the authorised bank

PTI adds…

• When Congress leader Mallikarjun Kharge asked what purpose the bonds would serve when the name of the donor is not disclosed
• Mr. Jaitley said bonds would get reflected in the balance sheet of the donors.

Balance sheet of the donors will reflect the purchase of these bonds

• (For) donors who buy these bonds, their balance sheet will reflect (the purchase)
• It will ensure cleaner money coming from donors, cleaner money coming to political party and ensure significant transparency
• The 15 days’ time has been prescribed for the bonds to ensure that they do not become a parallel currency.
• “Every political party will file before Election Commission return as to how much money has come through electoral bonds,” the Minister said.

Why name of the donor a secret?

• The past experience has shown that once the names are disclosed, there is a tendency to shift to cash donations.
• The present system is unclean money and new system is a substantial amount of transparency if not total

Move away from cash

The idea is to move away from present system, which is cash, Mr. Jaitley said. “This will substantially help a lot of opposition parties because in case a disclosure is made it will always be in favour of ruling party,” he said. “People who are expressing apprehension let them suggest better way.”