What are Poll Bonds? Life of 15 Days, Donor Name Secret but KYC Must (Important) (Download PDF)

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Electoral Bond is a financial instrument for donating to political parties. These 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. These bonds shall be redeemable in the designated account of a registered political party within the prescribed time limit from issuance of bond.

Image of Poll Bonds India

Image of Poll Bonds India

Image of Poll Bonds India

What are the key features of Poll bond?

  • Redeemable in the designated account of a registered political party within the prescribed time limit from issuance of bond.

  • 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.

  • An Indian citizen or body incorporated in India will be eligible to purchase the bond.

  • The poll bond can be used for making donation only to the political parties registered under section 29A of the Representation of the People Act.

  • The donation can be done only to the political parties that secured not less than 1 % of the total votes polled.

  • A 15-day shelf life has been prescribed for the bonds to ensure that they do not become parallel currency.

  • Every political party will file before Election Commission in its return how much money has come through electoral bonds

Background

  • Electoral bond was announced in the Union Budget 2017 - 18. Required amendments to the Reserve Bank of India Act, 1934 (Section 31 (3) ) and the Representation of People Act, 1951 were made through Section 133 to 136 of Finance Bill, 2017

What is to be Done for Buying Poll Bonds?

  • Fulfilling all the existing Know Your Customer (KYC) norms

  • Making payments from a bank account

Why will Bonds not Have the Donor’s Name?

  • The bonds will not have not the donor’s name to maintain the secrecy of the donor name but the bonds will be reflected in the balance sheet of the donor.

  • If the bonds have the donor’s name, then there was a tendency to shift to cash donations.

    When and Where to Buy These Bonds?

  • The bonds could be bought from specified branches of state bank of India.

  • The bonds will be available for 10 days each in the months of January, April, July, and October. The window would be for an additional 30 days in the year of general election.

Why were Poll Bonds Introduced by the Government?

  • The poll bonds were introduced by the government to bring some transparency in the funding of the political parties. The transparency in funding is nil at present.

How Will the Political Parties Encash these Bonds?

  • A political party can encash these bonds only through “a designated bank account with the authorised bank. ”

  • These bonds would be an interest-free bearer instrument in the nature of a promissory note.

- Published/Last Modified on: February 4, 2018

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