ELECTORAL BOND SCHEME (Syllabus: GS Paper 2 – Polity)

Context: Recently, the Attorney General of India informed the Supreme Court that the electoral bond scheme, a method of political party funding, is believed to promote clean money, and he argued that citizens do not possess the right to information about the source of funds under Article 19(1)(a) of the Constitution.

• The scheme in question extends the benefit of confidentiality to the contributor. It ensures and promotes clean money being contributed. 
• It ensures abiding by tax obligations. Thus, it does not fall foul of any existing right,

Electoral Bond Scheme

• About: Electoral bonds function as financial instruments, resembling promissory notes. They are intended for donations to political parties, which can later redeem these bonds.
• Eligibility: Citizens of India or Indian incorporated entities are eligible to purchase these bonds.
• Purchase Options: These bonds are available for purchase in denominations of ₹1,000, ₹10,000, ₹10 lakh, and ₹1 crore from specified branches of the State Bank of India.

o Purchases: Individuals, whether alone or in conjunction with others, have the option to purchase these bonds.

• Designated Redemption: Electoral bonds can only be redeemed in the specified account of a legally registered political party.
• KYC Requirements: Buyers must meet all existing Know Your Customer (KYC) norms and make payments from a bank account to acquire electoral bonds.
• Limited Lifespan: 15 days, preventing them from functioning as a parallel currency.
• Donor Identity Exception: Donors who contribute less than ₹20,000 to political parties through the purchase of electoral bonds are not required to provide identity details.