SBI and Electoral Bonds: What is happening?

Electoral Bonds are back in the news after the State Bank of India (SBI) submitted the details to the Election Commission of India (ECI) as per Supreme Court ruling. If you are unaware of the whole issue, this article will help you understand the details. Once you understand the issue, we will discuss what happens next. But first things first - what are electoral bonds?

What are electoral bonds?

Electoral bonds are financial instruments introduced in India to facilitate transparent political funding. They are issued by the State Bank of India (SBI) which acts as the authorized bank for this purpose. Electoral bonds allow individuals and corporate entities to donate money to political parties, anonymously. These bonds can be purchased in denominations of Rs 1000 from SBI branches during certain periods notified by the government. The political parties can then encash these bonds through their designated accounts within a specified period.

Electoral Bonds were introduced in The Finance Bill, 2017 during Union Budget 2017-18 when the maximum limit of cash donation to political parties was capped at Rs 2,000 by Union Minister for Finance and Corporate Affairs, Arun Jaitley, in a move to enhance the transparency of political party financing.

Why was the Electoral Bond Challenged?

You would have figured by now that there are some issues with how electoral bonds work. The funding of political parties through Electoral Bonds was challenged by the below two NGOs in separate Petitions:

1)ADR and Common Cause

2) the Communist Party of India (Marxist)

As per the Money Bill 2017, all the political Parties have to reveal the names of donors who donate more than Rs 20,000 in cash. However, the donor name has not been revealed if the donation is through the Electoral Bonds, irrespective of the amount donated. Since the bonds are issued by SBI hence the list of donors and recipients will be with SBI.

Since the names of donors of Electoral Bonds are not public, big organizations can utilize this to seek favor from the government in power in terms of licenses, leases, policy changes, and government contracts. These large donations amounts from big institutions to the government can also play a major role during election campaigns.

Supreme Court Ruling

Here are details of the Supreme Court ruling from last month:

• The issuing bank shall herewith stop issuing electoral bonds.
• SBI shall issue details of the political parties that received electoral bonds and all the particulars received and submit them to ECI by March 6. SBI shall furnish bonds' purchase details with the date of purchase, name of purchaser, and denomination. SBI shall also submit details of parties who received contributions through Electoral Bonds. SBI should disclose details of each bond encashed.
• By March 15, ECI shall publish this information on the official website.
• Electoral Bonds not en-cashed by political parties shall be returned and refunded to purchasers.

Has SBI submitted Electoral Bonds details?

In the week ended March 10th, SBI sought more than three months to comply with the Supreme Court Order - till June 30, 2024. However, the Supreme Court rejected their request. Eventually, on 12th March, SBI submitted details of Electoral Bonds to the Election Commission of India. In the report, the SBI said a total of 22,217 electoral bonds were purchased, and 22,030 were redeemed by political parties between April 1, 2019, and February 15, 2024.

From April 1, 2019, to April 11 the same month, 3,346 bonds were purchased, and 1,609 were redeemed by parties. Between April 12, 2019, and February 15, 2024, donors bought 18,871 bonds, and 20,421 were redeemed by parties.

What Will Happen Next?

Next, the Election Commission will publish the data received from SBI on its website. The data include details like the purchase date of each electoral bond, the names of the purchasers, and the denomination of the bonds purchased.

We would reiterate - that the data related to electoral bond redemption is already in the public domain. The SC judgment ensures that the data related to the donor is now made public. Once the data is published on the website, you will know who received the donations on which date and the amount.