Electoral Bond-definition, history, working, controversies & more

March 16, 2024BANKING SERVICES

Electoral Bond

Electoral bonds have appeared as a significant aspect of political funding in several countries, notably in India. These financial instruments have gathered both support and criticism for their impact on transparency and accountability in the political process. Understanding electoral bonds requires an examination of their definition, history, functioning, controversies, and potential implications for democracy.

Contents of this post

What is an Electoral Bond?

Electoral bonds are a financial instrument introduced to facilitate transparent political funding. Essentially, these are bearer instruments resembling a promissory note that can be purchased by any Indian citizen or company incorporated in India from specified branches of authorized banks. These bonds are primarily used to donate funds to political parties.

History of Electoral Bonds

Electoral bonds were introduced in India through the Finance Act of 2017 as an alternative to cash donations made to political parties. The rationale behind their introduction was to bring about transparency in political funding by reducing the use of unaccounted money.

Can I know the Electoral bond data?

Here the table provides a concise summary of various aspects related to electoral bonds, including their introduction, management, denominations, validity, anonymity, reporting requirements, legal framework, controversies, court cases, and proposed reforms.

Aspect	Details
Introduction Year	Electoral bonds were introduced in 2018 through amendments to the Finance Act of 2017.
Authorized Banks	Electoral bonds are issued and managed by authorized banks designated by the Reserve Bank of India (RBI).
Denominations	Electoral bonds are available in various denominations, ranging from Rs. 1,000 to Rs. 1 crore.
Validity Period	Electoral bonds have a specified validity period, typically ranging from 15 days to 30 days from issuance.
Anonymity	Donor identities are kept confidential, and only authorized banks have access to information about purchasers.
Reporting Requirements	Political parties are required to disclose details of electoral bond donations to the Election Commission of India (ECI).
Legal Framework	The issuance and utilization of electoral bonds are governed by legal provisions outlined in the Finance Act and related regulations.
Controversies	Electoral bonds have faced criticism and controversies regarding transparency and accountability in political funding.
Court Cases	The implementation of electoral bonds has led to legal challenges, with petitions filed in courts seeking to address concerns related to transparency and accountability.
Reforms	The debate surrounding electoral bonds has prompted discussions on potential reforms to improve transparency and accountability in political funding.

How do Electoral Bonds Work?

Electoral bonds operate through a designated process. Individuals or entities can purchase these bonds in specified denominations from authorized banks. Once purchased, these bonds can be donated to registered political parties. However, the identity of the donor remains anonymous.

What are the steps to apply for an electoral bond?

To apply for electoral bonds in India, follow these steps:

1. Eligibility Check: Ensure that you meet the eligibility criteria for purchasing electoral bonds. Individuals, as well as companies incorporated in India, are eligible to buy these bonds.
2. Choose Authorized Bank: Identify the authorized bank branches where electoral bonds are available for purchase. These branches are designated by the Reserve Bank of India (RBI).
3. Visit to Bank: Visit the selected authorized bank branch during the specified working hours. It’s advisable to call the bank beforehand to confirm the availability of electoral bonds and any additional requirements.
4. Documentation: Carry the necessary documents as per the bank’s requirements. Typically, you’ll need to provide identification documents such as an Aadhaar card, PAN card, passport, or voter ID card, along with any other documents specified by the bank.
5. Purchase Electoral Bonds: At the bank, inquire about the process for purchasing electoral bonds. Fill out the application form provided by the bank with accurate details. You may need to specify the denomination and quantity of bonds you wish to purchase.
6. Payment: Make the payment for the electoral bonds through the available payment methods accepted by the bank. Payments can usually be made via check, demand draft, or electronic transfer, as per the bank’s guidelines.
7. Receive Bonds: Once the payment is processed and verified, you’ll receive the electoral bonds in physical or electronic form, depending on the bank’s procedures. Ensure that you collect the bonds along with the necessary receipts or transaction documents.
8. Donate Bonds to Political Party: You can then donate the electoral bonds to the registered political party of your choice. The bonds can be handed over directly to the party or deposited into their designated bank account, as per their instructions.
9. Maintain Records: Keep records of the electoral bonds purchased, including transaction receipts, for future reference and documentation purposes.
10. Follow Legal Guidelines: Adhere to all legal and regulatory guidelines governing the purchase and use of electoral bonds to ensure compliance with the law and avoid any potential penalties or legal issues.

Who releases electoral bonds?

Electoral bonds are released by the Government of India through authorized banks. These bonds are issued and managed by specified branches of authorized banks as per the guidelines set by the Reserve Bank of India (RBI) and the Ministry of Finance. The government regulates the issuance and utilization of electoral bonds to ensure transparency and accountability in political funding.

Benefits of Purchasing Electoral Bond

Purchasing electoral bonds offers several benefits, including:

1. Anonymity: Electoral bonds allow donors to maintain anonymity while making contributions to political parties. This anonymity protects donors from potential repercussions or undue influence.
2. Transparency: Despite donor anonymity, electoral bonds leave a paper trail, providing a level of transparency in political funding. The government and regulatory authorities can track the flow of funds through these bonds, enhancing accountability.
3. Legitimacy: Electoral bonds provide a legal and transparent mechanism for making political donations. By purchasing bonds from authorized banks, donors ensure that their contributions comply with legal requirements and regulations.
4. Reduced Cash Transactions: Electoral bonds aim to reduce the reliance on cash transactions in political funding, which are often associated with corruption and black money. By channeling donations through bonds, the government seeks to curb illicit practices and promote transparency.
5. Support for the Democratic Process: Purchasing electoral bonds allows individuals and companies to support the democratic process by contributing to political parties of their choice. This financial support helps parties engage in electoral campaigns, policy advocacy, and other democratic activities.
6. Ease of Purchase: Electoral bonds can be conveniently purchased from authorized bank branches, simplifying the process for donors. The availability of bonds in different denominations provides flexibility for donors to choose the amount they wish to contribute.
7. Regulatory Compliance: Electoral bonds comply with legal and regulatory requirements governing political funding. Donors can contribute to political parties without violating laws related to campaign finance or electoral expenditures.
8. Encouraging Transparency: While the system is not without its criticisms, electoral bonds have encouraged discussions about transparency and accountability in political funding. The existence of bonds has prompted debates on reforms and improvements to enhance the transparency of political finance.

Who will get the benefits of the Electoral Bond?