Electoral bonds were a mode of funding for political parties in India. It was introduced in 2018 and a public interest litigation was started against it in 2020 by the Association for Democratic Reforms (ADR) and the Communist Party of India (Marxist). The law was struck down as unconstitutional by a five-judge bench of the Supreme Court on 15 February 2024. The State Bank of India was directed to cede the identities and other details of donors and recipients to the Election Commission of India, which was to publish them on its website.
On 7 November 2022, the Electoral Bond scheme was amended to increase the sale days from 70 to 85 in a year where any assembly election may be scheduled. The decision on Electoral Bond (Amendment) Scheme, 2022 was taken shortly prior to the assembly elections in Gujarat and Himachal Pradesh, while the Model Code of Conduct was implemented in both the states.
Ahead of the 2019 General Elections, Congress announced its intention to eliminate electoral bonds, if the party is elected to power. The Communist Party of India (Marxist) has also opposed the scheme, and was the sole national party to refuse donations through electoral bonds.
On 15 February 2024, a five-judge bench of the Supreme Court of India, headed by Chief Justice DY Chandrachud, unanimously struck down the electoral bonds scheme, as well as amendments to the Representation of People Act, Companies Act and Income Tax Act, as unconstitutional. They found it "violative of RTI (Right to Information)" and of voters’ right to information about political funding under Article 19(1)(a) of the Constitution. They also pointed out that it "would lead to quid pro quo arrangements" between corporations and politicians.
The State Bank of India was asked to hand over details of donors and recipients to the Election Commission of India by 6 March, and the ECI was to publish these online by 13 March. However, the SBI failed to submit the details by 6 March, and approached the Supreme Court asking for more time. The court turned down this request, following which the details were turned over to the ECI and published on their website.
Features Electoral bonds functioned like promissory notes and interest-free banking tools. Any Indian citizen or organization registered in India could buy these bonds after fulfilling the KYC norms laid down by the Reserve Bank of India (RBI). They could be procured by a donor solely through the means of cheque or digital payments in various denominations, such as one thousand, ten thousand, one lakh, ten lakh, and one crore from specific branches of the State Bank of India (SBI). Within a span of 15 days of issuance, these electoral bonds could be redeemed in the designated account of a legally registered political party under the Representation of the People Act, 1951 (u/s 29A) which had received at least 1% of the votes in the last election. The stanches of bonds were available for purchase for 10 days in the months of January, April, July, and October with an additional time-frame of 30 days in the year of general elections for Lok Sabha.
Electoral bonds featured anonymity since they bore no identification of the donor and the political party to which they were issued. In the event that the 15-day deadline was not met, neither the donor nor the receiving political party received a refund for the issued electoral bonds. Rather, the fund value of the electoral bond was remitted to the Prime Minister's National Relief Fund (PMNRF).
Objective The government capped cash donations to political parties at . Enforcing donation amount exceeding via the banking system would mean the declaration of assets by political parties and also enable their traceability. Then Finance Minister Arun Jaitley argued that this reform of electoral bonds is expected to enhance transparency and accountability in the realm of political funding, while also preventing the creation of illegal funds for future generations. Jaitley, while defending the anonymity of bonds, argued that if donors were asked to disclose their identity, they would revert back to cash donations. The anonymity of the bonds was also intended to protect the donors' privacy and shield them from potential harassment.
Impact The monetary contribution limit that any registered political party in India can receive from an individual has been restricted to ₹2,000 – representing a reduction to 10% of the previous threshold of ₹20,000. This was done through the Finance Act, 2017. Introduction of electoral bonds has effectively abolished the ceiling on contributions made by corporations, which was earlier limited to 7.5% of the organization's average net earnings over the preceding three-year period. An amendment to the Companies Act, 2013 ensured this change. The scheme resulted in the elimination of the mandatory obligation for individuals or corporations to provide comprehensive information regarding their political contributions. Instead of reporting a comprehensive breakdown of political donations within their annual financial reports, companies would now be solely required to disclose a consolidated sum for purchase of electoral bonds. Relevant provisions under the Income Tax Act, 1961 were amended in this regard. The Foreign Contribution Regulation Act (FCRA) was amended by the government, with the support of the opposition, to broaden the definition of a "foreign" entity, with the explicit aim of expanding the scope of firms that could lawfully make political contributions.
Critics argued that these changes would allow any person, corporation, or interest group to now anonymously donate an unrestricted amount of funds to any political party, and that no citizen, journalist, or civil society representative would be able to establish any connections. Statistics ECI Data On 11 March 2024, the Supreme Court ordered the State Bank of India to disclose the details of electoral bonds to the Election Commission of India (ECI) by the end of business hours the next day. This data was subsequently released by the ECI on their website on 15 March 2024. It includes the details of all bonds encashed between 12 April 2019, and 24 January 2024. On 17 March 2024, the Election Commission unveiled data received directly from political parties and is believed to be from the period before 12 April 2019.
The data released by the ECI showed that the biggest donor was Future Gaming and Hotels Pvt Ltd run by Mr Santiago Martin. This lottery company purchased bonds worth Rs 1,300 crore during the period 2019–2024. Of these, bonds worth Rs 100 crore were purchased seven days after a raid by India's Enforcement Directorate over charges of money laundering. The second and fifth biggest donors - Megha Engineering and Infrastructures Ltd and Vedanta Limited - also faced probes by law enforcement agencies during the period. Meanwhile, the third biggest donor - Qwik Supply Chain - was accused of being a subsidiary of Reliance Industries, a charge Reliance denied. However, the company's registration details indicated a connection.
+ Amount encashed by political parties since 12 April 2019 Political PartyAmount (in crores) 1 Bharatiya Janata Party 2 All India Trinamool Congress 3 Indian National Congress 4 Bharat Rashtra Samithi 5 Biju Janata Dal 6 Dravida Munnetra Kazhagam 7 YSR Congress Party 8 Telugu Desam Party 9 Shiv Sena 10 Rashtriya Janata Dal 11 Aam Aadmi Party 12 Janata Dal (Secular) 13 Sikkim Krantikari Morcha 14 Nationalist Congress Party 15 Jana Sena Party 16 Samajwadi Party 17 Janata Dal (United) 18 Jharkhand Mukti Morcha 19 Shiromani Akali Dal 20 All India Anna Dravida Munnetra Kazhagam 21 Sikkim Democratic Front 22 Maharashtrawadi Gomantak Party 23 Jammu & Kashmir National Conference 24 Goa Forward Party Issues 2018 Postponed from January 2018 and commencing on 1 March 2018, the first tranche of electoral bonds were made available for purchase over a span of ten days. State Bank of India issued and encashed these electoral bonds in fours of its branches at Chennai, Delhi, Kolkata and Mumbai.
Analysis of political parties' "Audited Accounts Contribution Statements" for the fiscal year 2017-18 ending on 31 March, which were duly submitted to both the Income Tax Department and the Election Commission of India reveals that BJP obtained electoral bonds amounting to ₹215 crore, whereas the Congress party received only ₹5 crore. It is noteworthy that no other registered political party, national or regional, has reported receiving any form of contribution through electoral bonds.
The third phase of electoral bond sale was scheduled for purchase from 1 May to 10 May at eleven SBI branches in Chennai, Kolkata, Mumbai and New Delhi along with designated branches in Assam, Gujarat, Haryana, Karnataka, Madhya Pradesh, Punjab, Rajasthan and Uttar Pradesh.
An application under the Right to Information (RTI) Act was filed in May 2018 to obtain information on cumulative number of donors and the aggregate quantity of electoral bonds sold by each authorized branch during the months of March and April, among other relevant particulars. The Central Public Information Officer (CPIO) declined the application in June 2018, citing that the compilation of such data would result in "disproportionate diversion of the bank’s resources" but gave only the denomination-wise figures for the sale of all such bonds through the designated branches which did not match with information provided in another application. However, SBI’s first appellate authority (FAA), in July 2018, acknowledged the blunder that the previously given electoral bond sale data — 10 bonds of ₹100,000 denomination, 38 bonds of ₹10,00,000 and 9 bonds of ₹1,00,00,000 denomination, totaling ₹12.93 crore — for the Gandhinagar branch was, in fact, "belonged" to the Bengaluru branch of the State Bank of India. The RTI applicant regretted the claims of transparency made by the government.
2019 The RTI response of SBI to a query by Vihar Durve has shown that the 2019 sale of Electoral Bonds in two tranches of January and March at eleven SBI branches, prior to the Lok Sabha elections in May, has experienced a significant surge amounting to Rs 1,716.05 crore. This figure represents a notable increase of 62.39% in comparison to the total sales of Rs 1,056.73 crore achieved through six tranches conducted in March, April, May, July, October and November of 2018.
2022 From 1 July to 10 July, SBI conducted the 21st phase of Electoral Bond sale.
2023 From 19 January to 28 January, 25th electoral bond sale was carried out while 26th phase of sale worth ₹970.50 crore was conducted from 3 April to 12 April ahead of Karnataka assembly elections on 10 May 2023.
Based on the data obtained through the Right to Information (RTI) by Commodore Lokesh Batra (retired) for the 26th edition of bond sale conducted by the State Bank of India (SBI), it has been revealed that a total of 1,470 bonds were sold. Among these, 923 bonds accounting for 95.10% of the total, were of the denomination of ₹1 crore. Additionally, the SBI sold 468 bonds valued at ₹10 lakh each, 69 bonds valued at ₹1 lakh each, and 10 bonds valued at ₹10,000 each. Highest sales of bonds amounting to ₹335.30 crore was at Hyderabad branch, followed by the Kolkata branch with sales of ₹197.40 crore and the Mumbai branch with sales of ₹169.37 crore. The Chennai branch recorded sales of bonds worth ₹122 crore, while the Bengaluru branch sold bonds worth ₹46 crore. In terms of bond encashment, the New Delhi branch saw redemption of bonds valued at ₹565.79 crore. Subsequently, the Kolkata branch redeemed bonds worth ₹186.95 crore.