Electoral Bond Scheme

News:Government of India has notified the Electoral Bond Scheme 2018.


About Electoral Bond Scheme:

  • Electoral bonds allows donors to pay political parties using banks as an intermediary.
  • The bond would be a bearer instrument in the nature of a Promissory Note and an interest free banking instrument.
  • It can be bought for any value in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore.


  • As per provisions of the Scheme, electoral bonds may be purchased by a citizen of India or entities incorporated or established in India. 
  • A person being an individual can buy electoral bonds either singly or jointly with other individuals. 
  • Only the registered political parties which have secured not less than 1% of the votes polled in the last Lok Sabha elections or the State Legislative Assembly are eligible to receive the Electoral Bonds.

Issuance of bonds:

  • The bonds are issued by Scheduled Commercial banks upon authorization from the Central Government to intending donors but only against cheque and digital payments (it cannot be purchased by paying cash).

How will the bonds help:According to the government,electoral bonds will help in:

  • Promoting transparency in funding and donations received by political parties 
  • Building a transparent system of acquiring bonds with validated KYC and an audit trail.
  • It will also prompt donors to take the banking route to donate with their identity captured by the issuing authority.This will ensure transparency and accountability.

Issues with Electoral bonds:

  • Electoral bonds keeps the identity of the donor absolutely confidential.
  • The bond would enable corporate houses to anonymously donate their unaccounted cash to political parties.
  • The ordinary citizens will not be able to know who is donating how much money to which political party.
  • The contribution received by any eligible political party in the form of electoral bonds will be exempt from income-tax as per Section 13A of the Income Tax Act.
  • Electoral bonds make electoral funding even more opaque. It will bring more and more black money into the political system.