Electoral Bond Scheme

Why in news?

• The Supreme Court recently asked the government whether the electoral bonds' system reveals the source of money pumped in to fund political parties even as the Centre repeatedly maintained that the scheme is "absolutely transparent".

Issued by:

• State Bank of India has been authorized to issue and encash Electoral Bonds through its 29 Authorised Branches.
• The bonds will be issued in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore.

Who can purchase it?

• Electoral Bonds may be purchased by a person, who is a citizen of India or body incorporated or established in India.
• These bonds are bearer instrument in nature of promissory note and interest-free banking instrument.
• The purchaser is allowed to buy electoral bonds only on due fulfilment of  KYC norms.
• Donors can donate the bonds to their party of choice which can then be cashed in via the party's verified account within 15 days.

Availability:

• The bonds will be available for purchase for a period of 10 days each in the beginning of every quarter, i.e. in January, April, July and October as specified by the Central Government.
• An additional period of 30 days shall be specified by the Central Government in the year of Lok Sabha elections.

Who are eligible to receive?

• Those political parties which are:
  • Registered under Section 29Aof the Representation of the People Act, 1951
  • Secured not less than one per cent of the votes polled in the last General Election to the House of the People or the Legislative Assembly
  • The Electoral Bonds shall be encashed by a Political Party only through a Bank account with the Authorized Bank.

Other important points:

• Union government has exempted political parties from disclosing donations received through electoral bonds.

PRACTICE QUESTION:

Consider the following statements regarding Electoral bonds:

1. They are refundable if the buyer wishes to return them to issuing bank.

2. Bond holders can obtain loans on the guarantee of these bonds.

3. They can be purchased based on any value from Rs.10 to Rs.1,00,000

Which of the statements given above is/are not correct?

(a) 1 and 2 only

(b) 1 and 3 only

(c) 3 only

(d) 1,2 and 3

Answer