The government on Wednesday, 3 January, finalised the terms of issuance of electoral bonds during the ongoing Winter Session of Parliament.
These bonds will be interest-free banking instruments like promissory notes that can be encashed by an eligible political party through a designated bank account, Finance Minister Arun Jaitley said in the Lok Sabha.
The Narendra Modi government mooted the idea of electoral bonds in Budget 2017-18 to make political funding more transparent. The bonds were pitched as an alternative to cash donations made to political parties.
Here’s a quick explainer on how these bonds work, according to a statement issued by the government.
How Do Electoral Bonds Work?
1. What is an Electoral Bond?
An electoral bond will be an interest-free banking instruments like promissory notes that can be encashed by an eligible political party through a designated bank account. The banking instrument can be purchased in the denomination of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, Rs 1 crore. The life of the electoral bonds will be 15 days.
Expand2. Who Can Purchase the Bonds?
A citizen of India or a body incorporated in India can purchase the bonds from select branches of the State Bank of India.
Expand3. What Does the Purchaser Need to do to Buy an Electoral Bond?
A purchaser needs to satisfy extant KYC requirement while opening an account. Payment to purchase the bond can be done only through a bank account. The bonds will not carry the name of the payee.
Expand4. When Can the Bonds be Bought?
The bonds are available for 10 days each in January, April, July and October. In the year of Lok Sabha polls, it is available for an additional 30 days.
Expand5. Eligible Political Party
The party should have secured more than 1 percent of vote share in the previous Lok Sabha or Legislative Assembly polls to receive the bonds. Donations can be made to political parties registered under Section 29A Representation of the Peoples Act 1951. The political party will encash the bond through a designated bank account.
(The article was published in arrangement with BloombergQuint)
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Expand
What is an Electoral Bond?
An electoral bond will be an interest-free banking instruments like promissory notes that can be encashed by an eligible political party through a designated bank account. The banking instrument can be purchased in the denomination of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, Rs 1 crore. The life of the electoral bonds will be 15 days.
Who Can Purchase the Bonds?
A citizen of India or a body incorporated in India can purchase the bonds from select branches of the State Bank of India.
What Does the Purchaser Need to do to Buy an Electoral Bond?
A purchaser needs to satisfy extant KYC requirement while opening an account. Payment to purchase the bond can be done only through a bank account. The bonds will not carry the name of the payee.
When Can the Bonds be Bought?
The bonds are available for 10 days each in January, April, July and October. In the year of Lok Sabha polls, it is available for an additional 30 days.
Eligible Political Party
The party should have secured more than 1 percent of vote share in the previous Lok Sabha or Legislative Assembly polls to receive the bonds. Donations can be made to political parties registered under Section 29A Representation of the Peoples Act 1951. The political party will encash the bond through a designated bank account.
(The article was published in arrangement with BloombergQuint)
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)