In 2021, electoral bonds worth Rs 1,502 crore were redeemed, while in 2020 Rs 363 crore worth of bonds were redeemed.
The highest redemption of electoral bonds was in 2019 at Rs 5,062 crore when the Lok Sabha elections took place.
On January 29, 2018 the Narendra Modi-led NDA government notified the Electoral Bond Scheme 2018. Electoral bonds were introduced to ensure that all the donations made to a party would be accounted for in the balance sheets without exposing donor details to the public.
An electoral bond is like a promissory note that can be bought by any Indian citizen or company incorporated in India from select branches of State Bank of India. The citizen or corporate can then donate the same to any eligible political party of his/her choice.
The bonds are issued in multiples of Rs 1,000, Rs 10,000, Rs 100,000 and Rs 1 crore (the range of a bond is between Rs 1,000 to Rs 1 crore). A donor with a KYC-compliant account can purchase the bonds and can then donate them to the party or individual of their choice. Now, the receiver can encash the bonds through the party’s verified account. The electoral bond is valid only for fifteen days.
The payments for the issuance of the bonds are accepted in Indian Rupee, through a demand draft, a cheque, or the Electronic Clearing System, or direct debit to the buyer’s account.
The Electoral Bonds have hidden alphanumeric numbers on them. This is an internal security feature to prevent printing/enchashment of any forged EBs.
“The Electoral Bond Scheme is, in fact, an unprecedented step towards cleansing the process of funding of political parties and major improvement over conventional practice of funding the political system through donations in cash. The purchaser is allowed to buy electoral bond(s) only on due fulfillment of all the extant instructions regarding KYC norms issued by the Reserve Bank of India (RBI) and by making payment from a bank account. All payments for the issuance of the bond are accepted only in Indian rupees, through demand draft or cheque of through Electronic Clearing System or direct debit to the buyer’s account,” said Pankaj Chaudhary, minister of State in the Ministry of Finance.