An electoral bond is an instrument in the nature of a promissory note or bearer bond which can be purchased by any individual, company, firm or association of persons provided the person or body is a citizen of India or incorporated or established in India.
The bonds, which are in multiple denominations, are issued specifically for the purpose of contribution of funds to political parties in its existing scheme in the country.
Electoral bonds were introduced through Finance Act 2017, which in turn amended three other statutes – the RBI Act, the Income Tax Act and the Representation of People Act – for enabling introduction of such bonds.
The 2017 Finance Act introduced a system of electoral bonds to be issued by any scheduled bank for the purpose of electoral funding.
The Finance Act was passed as a money bill, which meant that it did not require the assent of Rajya Sabha.
Various petitions are pending before the top court challenging at least five amendments made to different statutes through Finance Act 2017 on the ground that they have opened doors to unlimited, unchecked funding of political parties.
The Supreme Court is hearing petitions challenging the scheme as well as a plea challenging a recent notification extending the period of sale of electoral bonds by 15 days during years when elections are scheduled to be held for State assemblies and Union Territories with legislature.
The Central government in its affidavit has maintained that the electoral bonds scheme is most transparent.
Source: Barandbench
