Electoral Bond

To deal with the concern of ambiguity of the donors and improve political parties funding, various changes are being made by the Government. Under presented provisions, political parties must keep and preserve evidence of voluntary contributions obtained more than Rs.20,000/- and the name as well as the address of the person who has made such contribution. To improve the transparency of funding, while protecting the privacy of donors, the Government has introduced Electoral Bonds.

Electoral Bonds

Electoral Bond is a financial tool for enabling donations to political parties. The Scheduled Commercial banks issue Electoral Bonds upon authorization as of the Central Government to intending donors of political parties against payment through cheque, DD or digital payment (it cannot be purchased by paying cash). These bonds shall be exchangeable in the designated account of a registered political party in the approved time limit from issuance of the bond. The Union Budget 2017-18 introduces the electoral bond and the requirements of Electoral Bonds will take effect from 01.04.2018 and will be relevant to AY 2018-19. Also, performs necessary amendments to the Reserve Bank of India Act, 1934 (Section 31(3)) and the Representation of People Act, 1951 under Section 133 to 136 of Finance Bill, 2017.

Purpose of Electoral Bonds

Electoral Bond is an attempt to bring in transparency into political funding in India. The system of Electoral Bonds addresses the distress of donors continues to be unknown to the general public otherwise to rival political parties. This reform is anticipated to encourage superior transparency and answerability in political funding, at the same time as preventing the prospective generation of black money.

KYC Norms for Electoral Bonds

The purchaser of electoral bonds allows purchasing on due fulfilment of all the existing KYC norms and by ensuring payment from a bank account. However, the name of the payee will not exist in the Electoral Bond. Hence, the general public and the opposition parties may not know who purchased the bonds. However, the Government, as well as the concerned authorities, will know the identity of the purchases since KYC norms are implemented for the purchase of Electoral Bonds. Know more about KYC norms.

Validity of Electoral Bonds

Electoral Bonds are valid for 15 days during within which utilizes for donating to political parties registered under section 29A of the Representation of the Peoples Act, 1951 (43 of 1951). Further, the party to which a donation requires more than 1 % of the votes polled in the most recent general election to the House of the People otherwise a Legislative Assembly.

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Frequently Asked Questions

Common questions about Electoral Bonds in India: Transparency in Political Funding.

An electoral bond is a financial instrument introduced by the Government of India to facilitate transparent political funding. It is a bearer instrument that can be purchased from authorized banks and donated to registered political parties, enabling them to receive funds without disclosing the identity of the donor.

Electoral bonds were introduced to bring greater transparency and accountability in political funding while protecting the privacy of donors. The aim was to encourage legitimate funding and discourage the generation of black money for political contributions.

Electoral bonds can be purchased from authorized commercial banks by fulfilling the existing Know Your Customer (KYC) norms and making payment through cheque, demand draft, or digital payment. Cash payments are not allowed for purchasing electoral bonds.

An electoral bond is valid for 15 days from the date of issuance, during which it can be donated to a registered political party that has secured at least 1% of the votes polled in the most recent general election.

While the purchaser of an electoral bond needs to comply with KYC norms, their name is not mentioned on the bond itself. This ensures that the general public and opposition parties do not know the identity of the donor, but the authorities have access to the information.

No, electoral bonds can only be used for donating to registered political parties. They cannot be converted into cash or used for any other purpose.

The introduction of electoral bonds required amendments to the Reserve Bank of India Act, 1934 (Section 31(3)) and the Representation of the People Act, 1951 (Sections 133 to 136) through the Finance Bill, 2017.

Political parties are required to keep and preserve evidence of voluntary contributions received through electoral bonds, including the name and address of the donor, if the amount exceeds Rs. 20,000.

No, electoral bonds cannot be purchased anonymously. Purchasers need to comply with KYC norms and make the payment through traceable channels, ensuring that the authorities have access to the identity of the purchaser.

The criteria of securing at least 1% of the votes polled in the most recent general election ensures that only parties with a significant voter base can receive donations through electoral bonds, promoting accountability and preventing misuse.