Electoral Bonds for Political Funding : Details & Rules

The Union Government in last year’s budget session (2017) had capped anonymous cash donations to political parties at Rs 2,000 and indicated that Electoral Bonds scheme would be rolled out for political funding.

The Govt has now notified the rules and guidelines for Political funding through electoral bonds on 2nd Jan, 2018.

So, what are these Electoral Bonds? Who can buy these bonds? How Political parties can encash these bonds? Let’s Discuss….

Electoral Bonds Scheme – Rules

If you want to donate some fund to a political party of your choice, you can do so in cash of up to Rs 2,000. Beyond that you can not donate the amount in cash mode.

Electoral bonds will now allow a political donor to purchase bonds from authorized banks and these can be redeemed by a political party through their registered bank account within a prescribed time frame. Electoral bonds would be a bearer instrument in the nature of a promissory note and an interest-free banking instrument.

These bonds will allow donors to remain anonymous and pay political parties using banks as intermediaries.

Electoral Bonds for Political Funding pic

  • Who can buy Electoral Bonds? – Only Indian citizens or bodies incorporated in the country can purchase these bonds.
  • Where to buy? – These bonds can be purchased at authorized SBI branches only and in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore.
  • When to buy? – The bonds shall be available for purchase for a period of 10 days each in the months of January, April, July and October, with an additional 30 days to be specified by the Central government in the year of a general election.
  • Is KYC mandatory? – The purchaser would be allowed to buy electoral bonds only on due fulfillment of all know your customer (KYC) norms and by making the payment from his/her bank account only. However, the bonds will not carry the purchaser names on them.
  • How political parties can encash these bonds? – Donors can buy these bonds at SBI and give/donate them to a political party of their choice. The party can then encash them through their designated bank account (with SBI) within 15 days. So, the life of electoral bonds is 15 days only. (Need clarity on – In case, bonds are not encashed within 15 days, what will happen to the donated amount??..)
  • Can any political party accept these bonds? – Only political parties that got at least 1% of the total votes polled in either the last assembly or general election will be eligible to accept electoral bonds. Also, every political party has to file a Return before Election Commission, as to how much money has come through these electoral bonds. Also, all the eligible political parties have to submit their bank accounts details to the Election Commission.
  • The donations made to any Political party can be claimed as tax deduction under section 80GGC.

Latest update (23-Feb-2018) :State Bank of India (SBI) has been authorised to issue and encash Electoral Bonds initially at its 4 Authorised Branches (Chennai/New Delhi/Kolkata/Mumbai) . The first issue of the Scheme will be opened in March 2018 in place of January 2018 for the first quarter of 2018. Accordingly, the first sale of Electoral Bonds will commence from 01stMarch 2018 for a period of 10 days i.e. up to 10thMarch 2018.

Latest Update (29-Mar-2018) :State Bank of India (SBI), in the 2ndPhase of sale, has been authorised to issue and encash Electoral Bonds through its 11 Authorised Branches (as per list enclosed) w.e.f. 02.04.2018 to 10.04.2018.


Do you believe that Electoral Bonds will help stamp out black money as a source of political funding? Can this scheme be successfully implemented? Kindly share your views, Cheers!

(Feature image courtesy : BusinessLine & BusinessStandard) (References : The Economic Times, & The Hindu)

(Post published on : 03-January-2018)

  • Pichai says:

    the black money generated so far and where and by whom it is held is still a matter of guess and approximation only.As we know the estimates of black money vary widely.This is because of the innumerable ways in which black money is generated and the legal loopholes available.The problem is huge but at the same time it does not mean no attempt should be made to attack the issue.what the government has initiated by means od demonetisation,electoral bonds etc is only a beginning and should be seen and understood as such.It is the duty of every patriotic Indian to support these moves and at the same time suggest any improvements we feel will better the efforts.Any effort will succeed only with alround and sustained efforts by all concerned.While we want the Government to make our life easy it is also our duty to bear with the short term difficulties if any to reap the benefits in the long run.

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