Syllabus: General Studies Paper 2

Donations through electoral bonds to political parties have gone up by Rs 389.5 crore to Rs 10,246 crore in the 21st sale of the financial instruments since they were launched in 2018.

As per the provisions of the EB Scheme, only the political parties registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951) and have secured not less than 1 per cent of the votes polled in the last general election to the House of the People or the Legislative Assembly, as the case may be, are eligible to receive electoral bonds.

The Electoral Bonds

• The Electoral Bonds are the non-interest-bearing financial instruments. 
• These Electoral bonds allow eligible donors to pay eligible political parties using banks as an intermediary. 
• The Electoral Bonds aim to ensure transparency in the funding of political parties.
• The State Bank of India (SBI) issues electoral bonds in the months of January, April, July, and October.
• The electoral bonds are available in denominations from Rs 1,000 to Rs 1 crore.
• The donors can buy electoral bonds and transfer them into the accounts of the political parties as a donation. The name of the donor is kept confidential.
• Political parties will create a specific account. This account will be verified by the ECI. The political parties will encash the electoral bonds only in this verified account.
• The bonds will remain valid for 15 days. Within that time, the political parties have to encash the electoral bond in the designated accounts.

Need for Electoral Bonds

• These bonds are aimed to reduce anonymous cash donations made to political parties.
• The Electoral bonds encourage political donations of clean money.