Donations to political parties through electoral bonds (EBs) have crossed the Rs 10,000-crore mark.



  • Donations to political parties through electoral bonds (EBs) have crossed the Rs 10,000-crore mark.
  • According to data available from State Bank of India (SBI), parties received Rs 389.5 crore through such bonds in the 21st sale of EBs conducted between July 1st and 10th.


What is an ‘electoral bond’?

  • An electoral bond is like a financial tool used for making donations to political parties.
  • The general public can also issue these bonds to fund eligible political parties.
  • The bonds play a similar role as banknotes that are payable to the bearer free of interest and demand.
  • An individual party can purchase these bonds digitally or with the help of a DD or cheque.
  • The electoral bond scheme was launched by the Union government in 2018.



  • A citizen of India or a body incorporated in India is eligible to purchase the bond.
  • EBs are issued/purchased for any value, in multiples of Rs 1,000, Rs 10,000, Rs 1,00,000, Rs 10,00,000 and Rs 1,00,00,000 from the specified branches of the State Bank of India (SBI).
      • SBI is the only bank authorised to sell these bonds.
  • EBs have a life of only 15 days during which it can be used for making donation only to the political parties registered under section 29A of the Representation of the Peoples Act, 1951.
      • The party must have secured not less than one per cent of the votes polled in the last general election to the Lok Sabha or a State Legislative Assembly.
  • The bonds shall be available for purchase for a period of 10 days each in the months of January, April, July and October as may be specified by the Central Government.
  • The bond can be encashed by an eligible political party only through a designated bank account with the authorised bank.
  • The political parties have to disclose the amount to the Election Commission.


Rationale behind the introduction of EB

  • EBs were introduced to ensure that all the donations made to a party would be accounted for in the balance sheets without exposing the donor details to the public.
      • The donor’s name is not mentioned on the bond.
      • Donors who contribute less than Rs 20,000 to political parties through purchase of electoral bonds need not provide their identity details such as PAN, etc.
  • The Central government said that electoral bonds would keep a tab on the use of black money for funding elections.
  • In the absence of electoral bonds, donors would have no option but to donate by cash after siphoning off money from their businesses, the government said.



  • The central criticism of the electoral bonds scheme is that it does the exact opposite of what it was meant to do: bring transparency to election funding. For example, critics argue that the anonymity of electoral bonds is only for the broader public and opposition parties.
  • The fact that such bonds are sold via a government-owned bank (SBI) leaves the door open for the government to know exactly who is funding its opponents.
  • This, in turn, allows the possibility for the government of the day to either extort money, especially from the big companies, or victimise them for not funding the ruling party. Hence, electoral bonds provide an unfair advantage to the party in power.
  • No upper limit on funding –
      • Before the electoral bonds scheme was announced, there was a cap on how much a company could donate to a political party: 7.5 per cent of the average net profits of a company in the preceding three years.
      • However, the government amended the Companies Act 2013 to remove this limit, opening the doors to unlimited funding by corporate India.