Electoral bonds were a financial instrument introduced by way of amendments to the Finance Act, 2017 to ensure transparency in electoral donations.
The Supreme Court said the Electoral Bonds (EB) scheme introduced in 2017 by way of amendments to the Finance Act is violative of one’s right to information and free speech under Article 19(1)(a). The court held that one has a right to know as to who is funding political parties.
Electoral Bonds were criticised for the anonymity they gave to those who donated to political parties.
Here are some key features of electoral bonds before their ban:
- Issuance: Electoral bonds are issued by the State Bank of India (SBI) at designated branches. They are available for purchase for a period of 10 days at the beginning of each quarter of the financial year, as well as an additional period of 30 days during the year of general elections.
- Denominations: The bonds are available in denominations of Rs. 1,000, Rs. 10,000, Rs. 1 lakh, Rs. 10 lakh, and Rs. 1 crore.
- Eligibility: Any citizen of India or a body incorporated in India can purchase electoral bonds. However, only registered political parties that secured at least 1% of the votes in the last general election or assembly election are eligible to receive donations through these bonds.
- Anonymity: The identity of the donor is kept anonymous, as the bonds do not carry the name of the donor. This has been a point of contention, with critics arguing that it could lead to a lack of transparency in political funding.
- Validity: Electoral bonds have a validity period of 15 days from the date of issuance. The political party receiving the bond can encash it only within this period.
- Usage: The funds received through electoral bonds can be used by the political party for any legitimate purpose as per the rules and regulations governing political parties in India.
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