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

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.

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.

Electoral bond

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.

Introduction YearElectoral bonds were introduced in 2018 through amendments to the Finance Act of 2017.
Authorized BanksElectoral bonds are issued and managed by authorized banks designated by the Reserve Bank of India (RBI).
DenominationsElectoral bonds are available in various denominations, ranging from Rs. 1,000 to Rs. 1 crore.
Validity PeriodElectoral bonds have a specified validity period, typically ranging from 15 days to 30 days from issuance.
AnonymityDonor identities are kept confidential, and only authorized banks have access to information about purchasers.
Reporting RequirementsPolitical parties are required to disclose details of electoral bond donations to the Election Commission of India (ECI).
Legal FrameworkThe issuance and utilization of electoral bonds are governed by legal provisions outlined in the Finance Act and related regulations.
ControversiesElectoral bonds have faced criticism and controversies regarding transparency and accountability in political funding.
Court CasesThe implementation of electoral bonds has led to legal challenges, with petitions filed in courts seeking to address concerns related to transparency and accountability.
ReformsThe 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?

The benefits of electoral bonds can accrue to various stakeholders involved in the political funding process. These include:

  1. Donors: Individuals and entities purchasing electoral bonds can benefit from the anonymity offered by the bonds. By keeping their identities confidential, donors may avoid potential repercussions or undue influence associated with publicly disclosing their contributions.
  2. Political Parties: Registered political parties receive the financial support provided through electoral bonds. These bonds serve as a legitimate and transparent source of funding for parties to conduct electoral campaigns, organize rallies, and engage in other political activities.
  3. Government: The government benefits from the increased transparency in political funding facilitated by electoral bonds. By channeling donations through bonds issued by authorized banks, the government aims to reduce the reliance on cash transactions and curb the flow of unaccounted money into politics.
  4. Regulatory Authorities: Regulatory bodies, such as the Election Commission of India (ECI), benefit from the reporting requirements associated with electoral bonds. Political parties are mandated to disclose details of bond donations, enabling regulatory authorities to monitor and scrutinize the flow of funds in the electoral process.
  5. Citizens: Enhanced transparency in political funding facilitated by electoral bonds can indirectly benefit citizens by promoting accountability and integrity in the democratic process. By contributing to cleaner and more transparent elections, electoral bonds contribute to the overall health of democracy.

Criticism Surrounding Electoral Bonds

Despite their intended purpose, electoral bonds have faced criticism on various fronts. One of the primary concerns is the lack of transparency, as the anonymity of donors makes it challenging to trace the sources of political funding. Additionally, there are apprehensions about the potential misuse of electoral bonds for money laundering and illicit political financing.

Support for Electoral Bonds

Proponents of electoral bonds argue that they offer a legitimate and transparent channel for political donations. They contend that these bonds help prevent the flow of unaccounted money into politics, thereby promoting a cleaner electoral process.

Comparison with Traditional Political Funding

Electoral bonds represent a departure from traditional modes of political funding, such as cash donations. Unlike cash contributions, which lack transparency and accountability, electoral bonds are designed to leave a paper trail, albeit with certain limitations regarding donor anonymity.

Legislation and Regulations

The introduction of electoral bonds necessitated amendments to existing legislation governing political funding. The Finance Act of 2017 laid down the legal framework for the issuance and utilization of electoral bonds, specifying the eligible entities, denominations, and procedures involved.

Controversies and Court Cases

The implementation of electoral bonds has been mired in controversies, leading to legal challenges and court cases. Critics have raised concerns about the potential misuse of these bonds to influence political outcomes and circumvent financial transparency norms.

Impact of Electoral Bonds on Indian Politics

The advent of electoral bonds has had a profound impact on the dynamics of Indian politics. While supporters argue that they promote transparency and accountability, opponents assert that they undermine democratic principles by allowing undisclosed corporate influence on political parties.

Future Prospects and Possible Reforms

The debate surrounding electoral bonds continues to evolve, with calls for reforms to address the shortcomings and loopholes in the existing system. Proposals for greater disclosure requirements and enhanced regulatory oversight have been put forward to strengthen transparency in political funding.

International Perspective on Electoral Bonds

Electoral bonds have attracted attention beyond India, with other countries exploring similar mechanisms to reform their political financing systems. Comparative studies and international collaborations offer valuable insights into the effectiveness and challenges associated with electoral bonds.


Electoral bonds represent a unique approach to political funding to enhance transparency and accountability in the electoral process. However, their implementation has sparked debates and controversies regarding their efficacy and implications for democratic governance. As countries grapple with the complexities of political finance, the future trajectory of electoral bonds remains subject to ongoing scrutiny and potential reforms.

Faqs on Electoral Bond

1. Are electoral bonds legal?

Yes, electoral bonds are legal instruments introduced through legislative measures.

2. Can anyone purchase electoral bonds?

Electoral bonds can be purchased by Indian citizens and entities incorporated in India meeting specified criteria.

3. How are electoral bonds different from traditional donations?

Unlike traditional donations, electoral bonds offer anonymity to donors while leaving a paper trail for tracking contributions.

4. Do electoral bonds ensure transparency in political funding?

While electoral bonds aim to promote transparency, concerns have been raised about their effectiveness in achieving this objective.

5. What reforms are being proposed to improve the electoral bond system?

Various reforms, including enhanced disclosure requirements and regulatory oversight, have been suggested to address the shortcomings of the electoral bond system.

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