Electoral Bond

Electoral Bond

The electoral bond scheme was announced in Union Budget 2017 with an aim for increasing transparency in political funding.

It is designed to be a bearer instrument like a Promissory Note — in effect, it will be similar to a bank note that is payable to the bearer on demand and free of interest.

It can be purchased by any citizen of India or a body incorporated in India.

It can be bought by the donor with a KYC-compliant account. Donors can donate the bonds to their party of choice which can then be cashed in via the party’s verified account within 15 days.

It will not bear the name of the donor.

The bonds will be available for purchase for a period of 10 days each in the beginning of every quarter.

The bonds will be issued in multiples of 1,000, 10,000, 1 lakh, 10 lakh and 1 crore. 


Advantages of the Electoral Bonds

  1. Bringing transparency in Electoral donations
  2. Protecting the donors from harassment
  3. Amount of donation in cash capped to Rs. 2000/-.
  4. No disclosure of information to third party as RBI only knows both Donor and Receiver
  5. Bringing political funding under Tax Purview (69% of Political fund is from unknown sources)


  1. Increased chances of Round Tripping from Tax Havens to political parties
  2. Lobbying of Government Policies in favour of Donors
  3. Misuse of RBI to malign or harass political opponents by Government.

Way forward

  1. Proper safeguards against sharing information to Government.
  2. Setting up of National Electoral Fund for distributing money to Political Parties.
  3. Removing the concessions given to Political Parties from State/Central Governments.

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