Finance minister Arun Jaitley on Tuesday unveiled the scheme of electoral bonds to cleanse the system of political funding in the country.
These bonds will be made available in multiples of Rs1,000, Rs10,000, Rs1,00,000, Rs10,00,000 and Rs1,00,00,000 from the specified branches of the State Bank of India (SBI).
Political donors wising to a political party, can buy these bonds and pay them to a registered party.
Electoral bond would be a bearer instrument in the nature of a promissory note and an interest-free banking instrument.
A citizen of India or a company incorporated in India will be eligible to purchase the bond.
The purchaser would 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 payee. Electoral bonds would have a life of only 15 days during which it can be used for making donation only to the political parties registered under section 29A of the Representation of the Peoples Act, 1951 (43 of 1951) and, which secured not less than one per cent of the votes polled in the last general election to the House of the People or a legislative assembly.
The electoral bonds under the scheme shall be made available for purchase for a period of 10 days each in January, April, July and October, as may be specified by the central government. In the year of a general election, however, the government may extend the period by an additional of 30 days.
The electoral bonds may be encashed by an eligible political party only through a designated bank account with the authorised bank.
Currently, political parties use the slack tax regime to accept donations from anonymous sources. As per ADR, about 70 per cent of political funding over an 11-year period came from unknown sources.
Political parties are instructed to report any donation of over Rs20,000 to the I-T department. But, donations are made in the form of cash in smaller amounts. electoral bonds aim to reduce this.