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Key Takeaways

  • Electoral Bonds are Instruments through which money can be donated to political parties for their political funding.
  • Can be purchased only through means which leave a digital footprint such as cheques or digital mechanisms.
  • Increases transparency about the funding received by the parties.
  • Keeps donors anonymous to protect their interests.


Electoral bonds are an instrument through which anyone can donate money to political parties, which were introduced in the 2017 Finance Bill. These bonds are sold in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh, and Rs 1 crore and can be purchased from the authorised branches of the State Bank of India.

The desired amount is to be paid by the donor by cheque or digital mechanisms as cash is not permitted. The political party to whom the donation was made can choose to encash such bonds within 15 days of receiving them in order to fund their electoral expenses. The donor’s identity is kept anonymous in this process

The concept of electoral bonds was introduced in an attempt to cleanse the system of political funding in India. It brought transparency to the system of electoral funding, which in turn contributes to the free and fair elections in the country.

When can Electoral Bonds be purchased

Electoral Bonds are available for purchase for ten days at the beginning of every quarter, that is, the first ten days of January, April, July and October. The government shall specify an additional period of 30 days in the year of the Lok Sabha elections.

Essentials of Electoral Bonds:

  1. The electoral bonds will not bear the names of the donor. The political party shall not be made aware of the donor’s identity.
  2. Those parties, who are registered under section 29(A) of the Representation of the People’s Act,1951 and have secured at least one per cent of the votes polled in the most recent elections or assembly elections will be eligible to receive electoral bonds. The election commission of India (ECI) will allot a verified account to the party, and all the transactions of an electoral bond will be made through this account.

Who can issue Electoral Bonds?

Any Indian corporate body, registered agency or undivided Hindu family can issue electoral bonds by donating funds to the political parties of their choice that are eligible for the campaign.

Advantages of Electoral Bonds

  1. It is an effort directed to reduce cash funding of political parties, as a consequence, it assists political parties to operate in a more transparent manner with regulatory authorities along with the general public.
  2. The identity of the person who has made the donation shall remain confidential.
  3. It obliges the political parties to explain how the sum of money received has been expended.
  4. It makes the political parties more accountable and vigilant in their monetary expenditure.
  5. Instils trust in the donor’s mind that the amount donated has been used for legitimate purposes.

Disadvantages of Electoral Bonds and their Arguments:

While this scheme was introduced to act as a check for political funding, some provisions have made it a controversial issue.

1. The provision of anonymity was not well received as it led to opacity in the procedure. It also did not require disclosure of the source of income of the donor and can be used as a method to turn black money into white through bonds.

Argument: These criticisms have relied on the ruling of the supreme court made in PUCL (People’s Union of Civil Liberties) V Union of India [AIR 1997SC 568], which stated that voters have a right to make an informed decision about their candidates by having the availability of basic information about the parties. Critics have extended this holding to the electoral bonds scheme as well and contend that not disclosing the identity of the donors violates the public’s right to know.

Political funding has been routed using cash that is not auditable and doesn’t require a centralised ledger. If the judgement of the PUCL case was extended to the electoral bonds scheme, donors might face harassment from political adversaries. They might prefer the anonymity of cash – which would defeat one of the principal reasons for the reform. Hence, to protect the donor, it is more suitable for the donations to be anonymous.

2. There is a 7.5% cap on corporate donations, which allows unaccounted and unlimited donations from them to political parties. It raises a doubt that this can be used in order to make some kind of deal between parties and the company itself.

Argument: Clause 2 (a) of the scheme of the electoral bonds states that the name of the buyer or payee shall not be varied. The anonymity makes it impossible for parties to sell influence through donations. It shields corporates from potential rent-seeking by political parties.

3. The “government of the day” or the ruling party would have access to the details of the donor because the State bank of India is a public sector bank.

Argument: Section 7(4) of the scheme states that the information shall be treated confidentially by the bank and shall not be disclosed to any authority for any purposes, except when demanded by a competent court or upon a criminal case by any law enforcement agency. Hence the donor’s identity shall be disclosed only if a court or law enforcement agency demands it.

4. Electoral bonds can be used as instruments for laundering money

Argument: Clause 11 of the electoral bonds scheme clearly stipulates that the donor may use banking channels like cheque or ECS which will leave a money trail and fully preserve its auditing. Also, Section 11(I)(d) of the Finance Act, 2017 limits cash donations to 2,000. These features have been created in order to prevent money laundering.


Electoral bonds have received great attention as a unique poll funding instrument.The central idea behind the electoral bonds scheme was to bring about transparency in the electoral funding system in India. It has both positive and negative sides. If used for the intended cause, this scheme offers the best way to protect the donor’s rights while making donations digitally through electronically issued bonds.

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