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What is the Electoral Bond Scheme?


Electoral bonds are legal tender that may be bought by individuals or businesses in India and function similarly to promissory notes or bearer bonds. The bonds are specifically intended to be used as a means of funding political parties. The government has announced the Electoral Bonds programme, which aims to purge the nation's political funding structure.

Electoral Bond Scheme: Key Features

  • An interest-free banking product, an electoral bond would function as a bearer instrument similar to a promissory note. The bond may only be purchased by Indian citizens or entities that are incorporated in India.
  • From the designated State Bank of India branches, electoral bonds would be issued/purchased for any value in multiples of about $1,000, $10,000, $1,000,000, and $1,000,000 (SBI).
  • The buyer could only purchase electoral bonds if all current KYC requirements were met and money was transferred from a bank account. It won't have the payee's name on it. With a 15-day expiration date, Electoral Bonds can only be donated to political parties recognised by section 29A of the Representation of the Peoples Act, 1951 (43 of 1951), and which have received at least 1% of the total votes cast in the most recent general election for the House of the People or a Legislative Assembly.
  • Unless the Central Government specifies otherwise, the bonds under the Scheme will be on sale for ten days apiece in the months of January, April, July, and October. In the year of the general election to the House of People, the Central Government shall specify an additional thirty days.
  • Only a specified bank account with the approved bank may be used by an eligible political party to cash the bond.

Scheme for electoral bonds and the Controversy

During the 2017 Budget Session, former finance minister Arun Jaitley made the initial announcement of the electoral bonds programme. Afterwards, it received notice in January 2018 that money bills bringing changes to the Finance Act and the Representation of the People Act were a source of political finance. The Reserve Bank of India Act, the Companies Act, the Income Tax Act, and the Foreign Contribution Regulation Act (FCRA) were all amended by the Centre in order to carry out the scheme.

But the CPI(M), Congress, and a few NGOs filed a number of challenges in the Supreme Court challenging the constitutionality of the electoral bonds programme. On October 31, of last year, the hearing on this subject got underway. The petitioners presented a number of points regarding the programme, including its legality and potential damage to the nation.

The petitioners claim that the plan encourages corruption, opens possibilities for shell corporations, and infringes on their right to information. Kapil Sibal, a prominent counsel and member of the Rajya Sabha, has brought up the issue of a political party using money for reasons other than elections.

The Centre, however, has insisted that the programme is a "strong check on the use of illicit money in elections" and guarantees "transparency."

Final Verdict

The Supreme Court invalidated the electoral bonds programme on February 15, 2024. Political parties could receive financing anonymously thanks to the system.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not corpseed, and have not been evaluated by corpseed for accuracy, completeness, or changes in the law.


A content writer with a degree in B.A LL.B. (Hons.) and LL.M. (Constitutional and Administrative Law) from NLIU, Bhopal. Apart from content writing, she is an avid reader, poet, and painter.

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