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Electoral bonds sale opens on Jan 1

  • Category
    Polity & Governance
  • Published
    3rd Jan, 2022

Context

The government approved the issuance of the 19th tranche of electoral bonds, which will be open for sale from January 1 to 10.

About

What is electoral bond?

  • An electoral bond is like a promissory note that can be bought by any Indian citizen or company incorporated in India from select branches of State Bank of India.
    • SBI is the only authorised bank to issue such bonds.

Promissory note

A promissory note is a written promise that one party will pay the other party by a specified time.

  • These are issued in multiple values of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore.
  • The citizen or corporate can then donate the same to any eligible political party of his/her choice.
  • The bonds are similar to bank notes that are payable to the bearer on demand and are free of interest. An individual or party will be allowed to purchase these bonds digitally or through cheque.
  • According to provisions of the scheme, electoral bonds can be purchased by a person who is a citizen of India or entities incorporated or established in India.

Who is eligible to received electoral bonds?

  • Registered political parties that have secured not less than 1 per cent of the votes polled in the last election of Lok Sabha or legislative assembly are eligible to receive electoral bonds.

The registration of all political parties is governed by the provisions of Section 29A of the Representation of the People Act, 1951.

What about validity?

  • An electoral bond will be 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, as per the statement.
  • The bond deposited by any eligible political party into its account would be credited on the same day.

The process

  • Issuing of bonds: The electoral accounts are issued by the State Bank of India (SBI).
  • Allotment of account by ECI: Political parties are allotted a verified account by the Election Commission and all the electoral bond transactions are done through this account only.
  • Buying and transferring: The donors can buy these electoral bonds and transfer them into the accounts of the political parties as a donation.
    • o   Every donor has to provide his/her KYC detail to the banks to purchase the electoral bonds. The names of the donors are kept confidential.
  • Encashing: The bonds remain valid for 15 days and can be encashed by an eligible political party only through a bank account with the authorised bank within that period only.

Background

  • The electoral bonds were introduced with the Finance Bill (2017).
  • In January 2018 the government notified the Electoral Bond Scheme 2018.
  • The sale of the first batch of electoral bonds took place from March 1-10, 2018.
  • The 18th tranche of the bond sale took place from September 1 to September 10, 2021.

The upcoming Assembly Election 

  • Assembly elections for 5 states — Uttar Pradesh, Uttarakhand, Punjab, Himachal Pradesh and Goa — are expected to be announced next month.
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