Electoral bonds Current Affairs - 2019
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The first sale of electoral bonds will start from March 1, 2018 for period of 10 days at four main branches of State Bank of India in Mumbai, Chennai, Kolkata and New Delhi. These bonds will have a life of 15 days, and citizen of India or an entity incorporated or established in the country can purchase them.
The electoral bonds scheme was announced in Union Budget 2017 with an aim for increasing transparency in political funding. It makes India first country in the world to have such unique bonds for electoral funding. These bonds are bearer instrument in nature of promissory note and interest-free banking instrument. It aims at rooting out current system of largely anonymous cash donations made to political parties which lead to generation of black money in the economy.
These electoral bonds 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 after fulfilling all existing Know Your Customer (KYC) norms and making payments from bank account. It will not carry name of payee.
The bond deposited by any eligible political party to its account shall be credited on the same day. No payment shall be made to any payee political party if bond is deposited after expiry of validity period. SBI has been allowed to issue and encash these bonds initially at its four authorised branches.
Eligible political parties can encash electoral bonds only through their bank accounts. Only registered political parties, that have secured not less than 1% of votes polled in last election of Lok Sabha or legislative assembly of state, will be eligible to receive electoral bonds.
The sale of electoral bonds comes ahead of elections in number of states through year. Karnataka is likely to go to polls in April-May followed by elections in Madhya Pradesh, Chhattisgarh, Rajasthan and Mizoram later in year.
The Union Government has announced details of electoral bonds for political funding that can be routed by donors to political parties. The electoral bonds scheme was announced in Union Budget 2017 with an aim for increasing transparency in political funding. It makes India first country in the world to have such unique bonds for electoral funding.
Details of electoral bonds
Electoral bonds will be bearer instrument in nature of promissory note and an interest-free banking instrument. These can be redeemed only through the registered accounts of a political party in a prescribed time frame. It aims at rooting out current system of largely anonymous cash donations made to political parties which lead to generation of black money in the economy.
Denominations: Electoral bonds can be purchased for any value in multiples of Rs.1,000, Rs.10,000, Rs.10 lakh, and Rs.1 crore from any of the specified branches of State Bank of India (SBI).
Purchasers: A citizen of India or a body incorporated in India will be eligible to purchase the bond. The purchaser is allowed to buy electoral bonds only on due fulfilment of all extant KYC norms and by making payment from a bank account. It will not carry the name of the payee.
Validity: It will have a life of 15 days during which they can be used to make donations to registered political parties. The bond can be encashed by an eligible political party only through a designated bank account with the authorised bank.
The electoral bonds will be available for purchase for a period of 10 days each in months of January, April, July and October with additional 30 days to be specified by Central government in year of general election so that this does not become a parallel currency.
Eligibility: Political parties that have secured not less than 1% of votes polled in last general election to Lok Sabha or Assembly can avail funding through this bonds.
According to Association for Democratic Reforms (ADR), most political parties use lax regime on donations to accept cash donations from anonymous sources. Nearly 70% of Rs. 11,300 crore in party funding over an 11-year period came from unknown sources. The electoral bonds will prompt donors to take banking route to donate, with their identity captured by the issuing authority.