Electoral Bonds : what and How work It and why it created

The Electoral Bonds were announced in the Central Budget of 2017 and were implemented on January 29, 2018. These were a type of financial instrument through which any political party could receive donations anonymously. In simpler terms, Electoral Bonds were a financial means for political parties to receive donations. It was akin to a promissory note that any Indian citizen or company could purchase from select branches of the State Bank of India and donate to any political party of their choice anonymously. No interest was applicable on these bonds, and they were available in denominations of ?1,000, ?10,000, ?1 lakh, ?10 lakh, and ?1 crore. The purchaser had to deposit an amount equal to the value of the bond in an authorized branch of SBI. Payment could only be made through cheque or digital means. Any individual or company could buy these bonds, and there was no limit on the number of bonds one could purchase. The validity of Electoral Bonds was only 15 days during which they could be used to make donations to registered political parties under the Representation of the People Act. Only political parties that had secured at least one percent of the votes in the previous general or assembly elections were eligible to receive donations through Electoral Bonds. These bonds were available for purchase for a period of 10 days in January, April, July, and October. Additionally, during the year of Lok Sabha elections, the Central Government could issue these bonds for an additional period of 30 days.

How work It?

The functioning of the scheme was primarily aimed at bringing transparency in the funding of political parties, as mentioned by the then Finance Minister Arun Jaitley in his 2017 budget speech. The central government mainly supported the scheme on this basis, where only parties registered under the Representation of the People Act, 1951 were eligible to benefit from it. Another mandatory condition was that the party must have received at least one percent of the total votes cast in the previous Lok Sabha or Assembly elections. Eligible parties were required to provide their bank account details to the Election Commission. Bonds were presented in multiples of Rs 1,000, ranging from Rs 1,000 to Rs 1 crore, and were easily available at certain branches of SBI. Any donor with a KYC-compliant account could purchase these bonds and later donate them to any political party. Subsequently, the receiver would convert them into cash using the party's verified account.

Why was the electoral bond created?

The electoral bond was created by the central government to keep a record of the funds received by political parties during elections. It was said by the central government that these bonds are for transparency in political funding. Under the electoral bond scheme, every political party will have to account for every penny received through the bonds to the bank.

Does the buyer of this bond get their money back?

An electoral bond is a type of receipt. It does not have the name of the donor. By purchasing this bond, you can write the name of the political party to which you want to donate. The money from this bond goes to the respective political party. There is no return on this bond. You can return this bond to the bank and get your money back, but it has a specified period.

What will be the effect?

The central government says that electoral bonds are necessary for transparency. It will put a stop to black money. The Election Commission says that this will end transparency and fake companies will be exposed. The Reserve Bank says that the electoral bond scheme poses a risk of money laundering. It will also encourage black money.

Electoral bonds were introduced under the Electoral Bond Finance Act 2017. These bonds were issued four times a year in January, April, July, and October. Customers could buy them by visiting the bank branch or online on its website.

Recently, a window for electoral bonds was open from January 2 to January 11. The window closed on January 11, and any donations received had to be encashed within 15 days.

The window for electoral bonds was supposed to open again, but it was postponed due to a court decision. Just before the general elections, a ban was imposed on electoral bonds. This has come as a shock to political parties planning to collect donations through electoral bonds.

Political parties will now have to deal with the issue of donations. They will have to explore other sources for election expenses. They will have to find alternatives for collecting donations. Consultation with the Election Commission will be necessary. A demand for options from the court can also be made.

Source by OnlineMedia

--Posted By : santoshnarayan