In line with its promise to clean up the political funding system, the Centre on Tuesday unveiled the contours of the ‘Electoral Bonds’ scheme, which seeks to ensure the flow of clean money to political parties, without revealing the donors’ names.

Briefing reporters outside Parliament House on the features of the scheme, Finance Minister Arun Jaitley said the electoral bonds will be a bearer instrument in the nature of a Promissory Note and an interest-free banking instrument.

A citizen of India or a body incorporated in India will be eligible to purchase the bond from specified branches of the State Bank of India, Jaitley said. The bonds can be purchased for any value in multiples of ₹1,000; ₹10,000; ₹1 lakh; ₹10 lakh; and ₹1 crore, he said.

The bonds will not carry the name of the payee and will be valid only for 15 days during which it can be used to make a donation only to certain political parties.

To benefit from the electoral bonds scheme, the political parties must have been registered with the Election Commission and should have secured not less than 1 per cent of the votes polled in the most recent General Election to the Lok Sabha or a State legislative assembly.

Also, the bonds can be encashed by an eligible political party only through a designated bank account with an authorised bank. Every political party has to submit details of one designated account to the Election Commission and the bonds can be encashed only in that account. .

“From an existing system where there is unclean money and no transparency, we will move to a new system of clean money and substantial amount of transparency for political funding,” he said.

Earlier in the day, Jaitley tabled the notified scheme in Parliament.

Jaitley said the electoral bonds scheme will “substantially help” a lot of opposition parties. “Why will it help opposition parties? Because in case disclosure (of donors’ names) is mandated, it will favour the ruling party, not the Opposition party,” he said.

The fact that neither the donor nor the donee is known (under the electoral bonds scheme) means people will be free to donate to any political party of their choice, he said.

Jaitley also said the Centre was open to suggestions to improve the scheme.

“If people have apprehensions, let them suggest a better system. If they feel disclosure is a better system, I want to say that the experience of 70 years shows that we will only end up going back to the cash system. The idea is to move away from the current cash system,” Jaitley said when asked about apprehensions raised by certain political parties.

Electoral bonds under the scheme will be available for purchase for a period of ten days each in the months of January, April, July and October. An additional period of 30 days would be specified by the Centre in the year of general elections.

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