Lok Sabha elections 2019: All you need to know about electoral bonds

Union finance minister Arun Jaitley announced the electoral bonds as a means of a donation to political parties during his budget speech in 2017.

Electoral bonds were pitched as an alternative to cash donations made to political parties and as a means of ensuring more transparency in political funding.

These bonds, unlike debt instruments, resemble promissory notes, which allow donors to pay political parties with banks as an intermediary. Electoral bonds were introduced after changes in the Finance Act 2017. There was related amendments in the income tax act, the RBI Act, and the representation of people act.

Here is all you need to know about electoral bonds:

How do electoral bonds work?

They are issued by the State Bank of India (SBI) for amounts ranging from Rs 1000 to Rs 1 crore and are available for a period of 10 days each in the months of January, April, July and October, with an additional period of 30 days specified by the central government in the year of general elections.

Donors can buy the interest-free banking instrument and then transfers them to the account of the political party, where they are converted into donations.

The bonds can be purchased only after making payment through know your customer-compliant account. They can be encashed by an eligible political party only through a designated bank account with the authorised bank.

An electoral bond is valid for 15 days from the date of issue. No payment would be made to any payee political party if the bond is deposited after the expiry of the validity period. The bond deposited by any eligible political party into its account would be credited on the same day.

Who can buy electoral bonds?

As per the provisions of the scheme, electoral bonds may be purchased by a person, who is a citizen of India or entities incorporated or established in India. A person can buy electoral bonds, either singly or jointly, with other individuals.

Even foreign companies can buy electoral bonds.

Which parties can receive electoral bonds?

Any party that is registered under section 29A of the Representation of the People Act, 1951, and has secured not less than 1% of the votes polled in the last election of the Lok Sabha or legislative assembly will be eligible to receive electoral bonds.

Where can one buy electoral bonds?

SBI is the only authorised bank to issue such bonds. The 29 specified SBI branches are in cities like New Delhi, Gandhinagar, Patna, Chandigarh, Bengaluru, Bhopal, Mumbai, Jaipur, Lucknow, Chennai, Kolkata and Guwahati.

Which party gained the most through these bonds?

The BJP was the biggest beneficiary of the electoral bond scheme in 2017-18, receiving bonds worth Rs 210 crore of the Rs 215 crore issued. As per the audit and income tax reports submitted by the party to the election commission, it earned Rs 210 crore through electoral bonds, while the Congress, which earned Rs 199 crore as income in 2017-18, got only Rs 5 crore in donations from electoral bonds.


The electoral bonds scheme, which was introduced by the government in early 2018, has been criticised on several grounds.

The feature of anonymity of the donor is one of them as neither the donor nor the political party is obligated to reveal whom the donation comes from. Experts have said this undercuts the freedom of political information, which is an integral element of Article 19(1)(a) of the Constitution (the free expression clause).

The Election Commission also differed with the Centre’s view that their introduction would make the process transparent. The poll panel found the mode of donation to political parties opaque.


First Published:
Mar 20, 2019 12:12 IST

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