The bonds, which would stand for 15 days, will not bring the donor’s name although the buyer would have to fulfil KYC norms at the bank, Finance Minister Arun Jaitley stated in the Lok Sabha while announcing the contours of the plan.
He had first revealed the concept of electoral bonds in his Spending plan 2017-18 speech made on February 1, 2017, to make political financing more transparent.
“The federal government has actually now finalised the scheme of electoral bonds. The scheme will be alerted today,” he said.
Although called a bond, the banking instruments looking like promissory note will not carry any interest. The loan provider will stay the custodian of the donor’s funds till the political parties are paid.
The relocation is targeted at making political funding more transparent. Currently, nearly all of the funding is done by anonymous cash contributions. This action follows the adventurous transfer to prohibit high currency notes in November 2016 in a bid to flush the system of black money.
Electoral bonds will allow donors to pay political celebrations utilizing banks as an intermediary.
When Congress leader Mallikarjun Kharge asked exactly what function the bonds would serve when the name of the donor is not disclosed, Jaitley said bonds would get reflected in the balance sheet of the donors.
“Let me clear misconceptions, if any. I had announced in Budget plan speech that political funding has to be cleansed up. An extremely big part of donation concerning political parties by the donors, quantum and source is not understood … electoral bonds considerably clean the system,” he stated.
Electoral bonds, he said, can be given to registered political party which has actually protected at least 1 per cent vote in last election.
That celebration will have to provide one bank account to the Election Commission and it will need to be encashed within 15 days, Jaitley stated.
“Donors who purchase these bonds, their balance sheet will reflect. It will make sure cleaner money coming from donors, cleaner cash pertaining to political party and make sure considerable openness,” he stated.
The minister stated at present, donor, quantum and source of funds is not understood.
“The donor will understand which celebration he is depositing loan. The political party will submit return with the election commission. Now, which donor provided to which political party, that is the only thing which will not be understood,” he stated.
“Electoral bonds will guarantee clean loan and considerable transparency versus the present system of dirty loan”.
In the Spending plan for 2017-18, Jaitley had likewise announced capping cash donation at Rs 2,000 rather of Rs 20,000 and permitted celebrations to get digital donations.
Jaitley said the electoral bond, which will be a bearer instrument, will not carry the name of the payee and can be bought for any worth, in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore.
The bonds with a life of just 15 days, during which it can be utilized for making donation only to registered political parties, can be encashed only through a designated savings account of the receiver.
The bonds will be offered for purchase for 10 days each in the months of January, April, July and October. The window will be for One Month in the year of general election, he said.
Jaitley said the purchaser, whose name will not appear on the bonds, would need to make KYC (understand your client) disclosures to the SBI.
“A person of India or a body included in India will be qualified to buy the bond,” he stated.
Only political parties which has secured not less than one per cent of the votes polled in the last basic election or an assembly poll would be qualified to receive donations through electoral bonds, Jaitley said.
Later speaking with press reporters, Jaitley said the 15 days time has been prescribed for the bonds to make sure that they do not end up being a parallel currency.
“Every political celebration will file before Election Commission return as to how much loan has come through electoral bonds,” the minister said.
On why the name of the donor is being concealed, he stated the previous experience has shown that once the names are revealed, there is a propensity to move to cash contributions.
“Today system is dirty cash and brand-new system is a substantial amount of transparency if not total,” he added.
The concept is to move away from present system, which is cash, Jaitley said.
“This will significantly help a great deal of opposition celebrations because in case a disclosure is made it will constantly remain in favour of ruling celebration,” he stated. “Individuals who are expressing apprehension let them suggest much better way.”