Electoral bonds of Rs 282 crore sold ahead of Bihar elections

Context

The State Bank of India (SBI) sold Electoral Bonds worth Rs 282 crore to fund political parties in October ahead of the Assembly elections in Bihar.

What are Electoral Bonds?

• The bonds, meant for funding political parties.

• Electoral Bonds are purchased anonymously by donors.

• They are valid for 15 days from the date of issue.

• The bonds can be redeemed only by an eligible political party by depositing the same in its designated bank account maintained with an authorized bank.

• They are issued by SBI in the denomination of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore.

• An electoral bond is a debt instrument, which people can buy from the bank, and donate to a political party.

• The political party then encashes the bond by selling it back to the bank

Which party is eligible to receive the bonds?

• Only political parties which are registered under Section 29A of the Representation of the People Act, 1951

• And 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.

Why it is being criticized?

• The Finance Act of 2017 introduced the use of Electoral Bonds which is exempt from disclosure under the Representation of the People Act, 1951, opening doors to unchecked, unknown funding to political parties.
• The information furnished by the purchaser shall be treated confidentially by the State Bank of India and shall not be disclosed to any authority for any purposes, except when demanded by a competent court or upon registration of a criminal case by any law enforcement agency.
• The anonymous financing by Indian as well as foreign companies can have serious repercussions on the Indian democracy.