Clean political funding: FM Jaitley announces contours of electoral bonds
Finance Minister Arun Jaitley on Tuesday announced the details on the new electoral bonds that donors can buy from SBI and said receiving political parties can encash only through a designated bank account.
The electoral bonds, which are being pitched as an alternative to cash donations made to political parties, will be available at specified branches of State Bank of India (SBI) for 10 days each in months of January, April, July and October.
The bonds, which would be valid for 15 days, will not carry the donor's name even though the purchaser would have to fulfil KYC norms at the bank, Jaitley said in the Lok Sabha while announcing the contours of the scheme.
He had first announced the idea of electoral bonds in his Budget 2017-18 speech made on February 1, 2017, to make political funding more transparent.
"The government has now finalised the scheme of electoral bonds. The scheme will be notified today," he said.
Although
called
a
bond,
the
banking
instruments
resembling
promissory
note
will
not
carry
any
interest.
The
lender
will
remain
the
custodian
of
the
donor's
funds
until
the
political
parties
are
paid.
The
move
is
aimed
at
making
political
funding
more
transparent.
Currently,
almost
all
of
the
funding
is
done
by
anonymous
cash
donations.
This
step
follows
the
audacious
move
to
ban
high
currency
notes
in
November
2016
in
a
bid
to
flush
the
system
of
black
money.
Electoral bonds will allow donors to pay political parties using banks as an intermediary.
When Congress leader Mallikarjun Kharge asked what purpose 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
speech
that
political
funding
needs
to
be
cleansed
up.
A
very
large
part
of
donation
coming
to
political
parties
by
the
donors,
quantum
and
source
is
not
known....
electoral
bonds
substantially
cleanse
the
system,"
he
said.
Electoral
bonds,
he
said,
can
be
given
to
registered
political
party
which
has
secured
at
least
1
per
cent
vote
in
last
election.
That party will have to give one bank account to the Election Commission and it will have to be encashed within 15 days, Jaitley said.
"Donors who buy these bonds, their balance sheet will reflect. It will ensure cleaner money coming from donors, cleaner money coming to political party and ensure significant transparency," he said.
The minister said at present, donor, quantum and source of funds is not known.
"The donor will know which party he is depositing money. The political party will file return with the election commission. Now, which donor gave to which political party, that is the only thing which will not be known," he said, adding, "Electoral bonds will ensure clean money and significant transparency against the current system of unclean money".
In
the
Budget
for
2017-18,
Mr
Jaitley
had
also
announced
capping
cash
donation
at
Rs.
2,000
instead
of
Rs.
20,000
and
allowed
parties
to
receive
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
value,
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 only 15 days, during which it can be used for making donation only to registered political parties, can be encashed only through a designated bank account of the receiver.
The bonds will be available for purchase for 10 days each in the months of January, April, July and October. The window will be for 30 days in the year of general election, he said.
Jaitley
said
the
purchaser,
whose
name
will
not
appear
on
the
bonds,
would
have
to
make
KYC
(know
your
customer)
disclosures
to
the
SBI.
"A
citizen
of
India
or
a
body
incorporated
in
India
will
be
eligible
to
purchase
the
bond,"
he
said.
Only political parties which have secured not less than one per cent of the votes polled in the last general election or an assembly poll would be eligible to receive donations through electoral bonds, Jaitley said.
Later talking to reporters, Jaitley said the 15 days time has been prescribed for the bonds to ensure that they do not become a parallel currency.
"Every political party will file before Election Commission return as to how much money has come through electoral bonds," the minister said.
On
why
the
name
of
the
donor
is
being
kept
secret,
he
said
the
past
experience
has
shown
that
once
the
names
are
disclosed,
there
is
a
tendency
to
shift
to
cash
donations.
"The
present
system
is
unclean
money
and
new
system
is
a
substantial
amount
of
transparency
if
not
total,"
he
added.
The idea is to move away from present system, which is cash, Jaitley said.
"This will substantially help a lot of opposition parties because in case a disclosure is made it will always be in favour of ruling party," he said. "People who are expressing apprehension let them suggest better way," Jaitley added.
PTI