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Tuesday, December 01, 2020

Electoral bonds of Rs 282 crore sold ahead of Bihar elections

Only Rs 80 lakh from Patna; funding to parties via bonds in 3 yrs is Rs 6,493 cr.

Written by George Mathew | Mumbai | Updated: November 21, 2020 9:45:12 am
Electoral bonds of Rs 282 crore sold ahead of Bihar electionsAccording to corporate sources, business houses in Mumbai are big purchasers of Electoral Bonds due to the anonymous nature of funding. (File)

The State Bank of India (SBI) sold Electoral Bonds worth Rs 282 crore to fund political parties in October ahead of the Assembly elections in Bihar.

With this, total donations to political parties through Electoral Bonds have touched Rs 6,493 crore from the time the scheme was introduced in 2018.

The bank sold 279 bonds worth Rs 1 crore each, 32 bonds worth Rs 10 lakh each to donors in the 14th tranche, which was open from October 19 to 28, the SBI said in its reply to a Right to Information application filed by The Indian Express.

According to the data, the bank’s main branch Mumbai issued bonds worth Rs 130 crore in the 14th tranche while the New Delhi branch issued Rs 11.99 crore bonds. The SBI branch in Patna sold only Rs 80 lakh worth of bonds. Its Bengaluru branch did not sell any bonds. Encashment of bonds worth Rs 237 crore were done in three cities — Bhubaneswar (Rs 67 crore), Chennai (Rs 80 crore) and Hyderabad (Rs 90 crore).

Electoral Bonds, which are purchased anonymously by donors, are valid for 15 days from the date of issue. The bonds can be redeemed only by an eligible political party by depositing the same in its designated bank account maintained with an authorised bank.

The bonds, meant for funding political parties, are issued by SBI in the denomination of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh and Rs 1 crore. An electoral bond is a debt instrument, which people can buy from the bank, and donate to a political party. The political party then encashes the bond by selling it back to the bank.

With the latest tranche, donors have given Rs 6,493 crore to political parties through Electoral bonds. Donors gave Rs 1,056.73 crore in 2018, Rs 5,071.99 crore in 2019 and Rs 363.96 crore in 2020, the SBI said in its RTI reply.

The extant instructions issued by the Reserve Bank of India regarding ‘know your customer’ (KYC) norms of a bank’s customer will apply to all applicants of the Electoral Bonds. “However, SBI as authorised bank may call for any additional KYC documents, if it deems necessary,” the SBI said.

Only political parties which are registered under Section 29A of the Representation of the People Act, 1951 (43 of 1951) and secured not less than one per cent of the votes polled in the last general election to the House of the People or the Legislative Assembly are eligible to open current accounts for redemption of Electoral Bonds.

According to corporate sources, business houses in Mumbai are big purchasers of Electoral Bonds due to the anonymous nature of funding.

“The information furnished by the purchaser shall be treated confidential by State Bank of India and shall not be disclosed to any authority for any purposes, except when demanded by a competent court or upon registration of criminal case by any law enforcement agency,” operating guidelines issued by SBI state.

NGO Association for Democratic Reform (ADR) recently moved the Supreme Court against the Electoral Bonds, saying “anonymous financing by Indian as well as foreign companies can have serious repercussions on the Indian democracy”. The Finance Act of 2017 introduced the use of Electoral Bonds which is exempt from disclosure under the Representation of the People Act, 1951, opening doors to unchecked, unknown funding to political parties.

The amendments removed the cap of 7.5 per cent of net profit in the last three years on campaign donations by companies. The ADR had earlier filed two applications in March 2019 and November 2019 for grant of stay on implementation of the bond scheme.

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