New Delhi: The government on Tuesday outlined the contours of electoral bonds, in an endeavour to clean up political funding.
Donors can buy electoral bonds from specified State Bank of India (SBI) branches, and receiving political parties can encash them only through a designated bank account.
The electoral bonds, which are being pitched as an alternative to cash donations made to political parties, will be available at specified SBI branches for 10 days each in the months of January, April, July and October. The window, however, will be open for 30 days for general elections. The bonds will be valid for 15 days, will not carry the donor’s name even though the purchaser would have to fulfil know-your-customer (KYC) norms at the bank, finance minister Arun Jaitley said. The electoral bonds will be available in multiples of Rs1,000, Rs10,000, Rs1 lakh, Rs10 lakh or Rs1 crore.
The finance minister had first announced the idea of electoral bonds in Union Budget 2017 to make political funding more transparent. “The government has now finalized the scheme of electoral bonds. The scheme will be notified today,” Jaitley said.
Although called a bond, the banking instruments resembling promissory note will not carry any interest. The lender will remain the custodian of the donor’s funds until the political parties are paid.
Currently, almost all of the political funding is done by anonymous cash donations. Electoral bonds will allow donors to pay political parties using banks as an intermediary.
Responding to Congress leader Mallikarjun Kharge’s question on what purpose the electoral bonds would serve if the donor’s name is not disclosed, Jaitley said the bonds would get reflected in the balance sheet of the donors. “Let me clear misconceptions, if any. I had announced in the budget speech that political funding needs to be cleaned up. A very large part of donation coming to political parties by the donors, quantum and source is not known.... Electoral bonds substantially cleanse the system,” he said.
Electoral bonds, Jaitley said, can be given to registered political party which has secured at least 1% vote in last election. That party will have to give one bank account to the Election Commission and it will have to be encashed within 15 days, Jaitley said. “Donors who buy these bonds, their balance sheet will reflect. It will ensure cleaner money coming from donors, cleaner money coming to political party and ensure significant transparency,” he said.
“The donor will know which party he is depositing money. The political party will file returns with the Election Commission. Now, which donor gave to which political party, that is the only thing which will not be known,” he said. “A citizen of India or a body incorporated in India will be eligible to purchase the bond.”
In the Union Budget for 2017-18, Jaitley had also announced capping cash donation at Rs2,000 instead of Rs20,000 and allowed parties to receive digital donations.
A 15-day window has been prescribed for electoral 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,” Jaitley said. ”The present system is unclean money and new system is a substantial amount of transparency if not total,” he added. The idea is to move away from present system, which is cash, 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. People who are expressing apprehension let them suggest better way.”