The Government on Tuesday outlined the details of the electoral bonds, which has been pitched as a tool for cleaning up the election funding. The bonds will be alternative to cash donation to political parties and can be purchased by donors from only specified branches of the State Bank of India for ten days each in January, April, July and October. The window will be for 30 days in the year of general election.
Only registered political parties which secured at least 1 per cent vote in last election will be eligible for receiving donation through electoral bonds. Any Indian citizen or a body incorporated in India will be eligible to purchase the bond. Though the identity of the donors will not be made public, banks will have his details since the purchaser will have to fulfil the KYC forms. The bonds will not carry interest.
Giving the details in the Lok Sabha, Finance Minister Arun Jaitley said the bonds, which would be valid for 15 days, will not carry the donor’s name. Jaitley had first announced the idea of electoral bonds in his Budget 2017-18 speech made on February 1, 2017, to make political funding more transparent.
On a question from Congress leader Mallikarjun Kharge as to what purpose the bonds would serve when the name of the donor is not disclosed, Jaitley said 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 cleansed 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.
That party will have to give one bank account to the Election Commission and it will have to be cashed within 15 days, Jaitley said.
“The donor will know which party he is depositing money. The political party will file return with the Election Commission. Now, which donor gave to which political party, that is the only thing which will not be known,” he said.
In the Budget for 2017-18, Jaitley had also announced capping cash donation at Rs 2,000 instead of Rs 20,000 and allowed parties to receive digital donations.
Jaitley said the electoral bond, which will be a bearer instrument, will not carry the name of the payee and can be bought for any value, in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore.
Jaitley said the purchaser, whose name will not appear on the bonds, would have to make KYC (know your customer) disclosures to the SBI.
Later talking to reporters, Jaitley said the 15 days time has been prescribed for the bonds to ensure that they do not become a parallel currency.
On why the name of the donor is being kept secret, he said the past experience has shown that once the names are disclosed, there is a tendency to shift to cash donations.
Jaitley said the bonds will help a lot of Opposition parties because in case a disclosure is made it will always be in favour of ruling party.