Electoral bonds: What is the next move for SBIs after a rejection of an appeal in the Supreme Court?

The Supreme Court recently turned down the State Bank of India’s plea. and ordered the bank to submit the details of bond purchasers within 24 hours.

Good evening. I am Manish. Welcome to City News! Our top story tonight revolves around the Electoral Bonds scheme, as the Supreme Court recently turned down the State Bank of India’s plea. To shed more light on this matter, we have two experts with us here, Sudhir and Satish, both experts in the fields of finance and law.

What are electoral bonds?

Anchor: Sudhir, Can you provide our viewers with a brief overview of the electoral bond scheme and why it has been a hot topic recently?

Sudhir: Thank you, The Electoral Bonds Scheme was introduced in 2018 to make political funding more transparent. The idea was to allow individuals and corporations to purchase bonds from authorized banks and donate them to political parties of their choice.

The bonds were intended to maintain the anonymity of the donor while ensuring a traceable route for the funds. However, concerns were raised about the scheme’s effectiveness in promoting transparency and curbing black money in politics.

The Election Commission (EC) will release the names of the contributors after the Supreme Court on Monday rejected the State Bank of India’s (SBI) request for an extension until June 30 to provide electoral bond details.

The Supreme Court ruled on February 15 that the Electoral Bond Scheme was invalid. The court also directed the SBI to give the EC the necessary information by March 6 and the poll panel to post the information on its website by March 13.

Nevertheless, the SBI petitioned the court for an extension two days before the deadline. The SBI is now required by the court to produce the data by Tuesday at the latest, and the EC is required to publish the information by Friday.

Impact on Electrol process

TV Anchor: Thank you, Sudhir. Now, turning to you, Satish, can you elaborate on the recent development where the Supreme Court turned down the State Bank of India’s plea? What implications does this decision have for the electoral bond scheme? Which details will the EC and SBI release to the public?

Satish: Certainly, the State Bank of India had approached the Supreme Court seeking permission to issue electoral bonds after the upcoming Loksabha elections. However, the court declined the plea, expressing reservations about the potential misuse of funds and the impact on the electoral process. This decision has sparked a renewed debate on the effectiveness and transparency of the electoral bond scheme.

The information includes the date of each electoral bond’s purchase, the buyer’s name and the bond’s denomination in a single list, and every electoral bond that political parties have cashed, along with the date and bond type, starting on April 12, 2019.

In the court’s interim order from 2019, the EC received the details of the bonds that were sold and cashed before that date in a sealed cover. On Monday, the poll panel passed orders to the court to post information on its website

The SBI had maintained that matching donor and party details for the 22,217 electoral bonds in question would require time. The CPI (M) and the Association for Democratic Reforms (ADR), who had filed petitions opposing the plan, responded by bringing contempt cases.

“The judgment does not tell you to do the matching exercise,” Chief Justice D.Y. Chandrachud told the bank on Monday.

Opposition to Electrol Bonds

TV Anchor: Sudhir, do you think the Supreme Court’s decision will lead to any significant changes in the Electoral Bonds scheme, and what could be the potential consequences? What disclosure requirements did the scheme have?

Sudhir: It’s a crucial decision that could pave the way for reevaluating the entire scheme. The Supreme Court’s concern about potential misuse and its impact on free and fair elections raises valid questions.

There might be discussions about revisiting the anonymity aspect of the scheme to ensure greater transparency. Additionally, the decision could prompt a broader examination of political funding mechanisms in the country.

With the introduction of the Electoral Bond Scheme by the Center in 2018, people and businesses could buy electoral bonds from the SBI and use them to anonymously support political parties.

Opponents of the plan have contended that electoral bonds enable political parties and contributors to conceal their affiliation from the public while enabling the SBI and, consequently, the government, to trace the funds.

Parties only reported to the European Commission (EC) in their annual accounts statements the total amount of donations made through electoral bonds for each fiscal year. The EC released these reports to the public following a review.

When the program initially began, a few parties disclosed the amount they had received through electoral bonds along with the information that it had been sent by “post,” implying that they were unaware of the name of the donor.

Is the Electrol bond system meant for transparent funding?

TV Anchor: Some argue that the electoral bond scheme was a step towards increasing transparency in political funding. What are your thoughts on this, and how might the current situation influence future reforms in this area? Since 2018, how many electoral bonds have been issued?

Satish: While the intention behind the Electoral Bonds scheme was to bring about transparency, the concerns raised by the Supreme Court and various stakeholders highlight the need for a more robust system.

It’s essential to strike a balance between protecting the privacy of donors and ensuring accountability in the political funding process. The current situation may act as a catalyst for broader discussions on electoral reforms, possibly leading to more effective measures to address the issues at hand.

Donors could claim an exemption from income tax under the system. In a May 2023 RTI reply, the Income Tax Department informed The Indian Express that “data is not available with ITD” in response to questions on the number of taxpayers who had claimed the exemption and the amount of tax exempted.

The SBI has only disclosed in response to RTI requests the total number of bonds sold and encashed over time, as well as the number of parties eligible to encashed bonds because donor information is exempt from RTI. Additionally, the SBI has stated that 25 parties had created bank accounts to cash electoral bonds in several responses, including one to The Indian Express. Bond purchases need donors to fill out a KYC form.

The government manufactured 8,350 bonds for a total of Rs 1 crore between December 29, 2023, and February 15, 2024. The government has issued bonds totalling Rs 35,660 crore since the scheme’s debut in 2018: 33,000 bonds valued at Rs 1 crore and 26,600 bonds valued at Rs 10 lakh each.

Donations received by Political Parties

TV Anchor: Sudhir, How much money have political parties received through electoral bonds?

Sudhir: Over 50% of the money went to BJP so far. The party got Rs. 6,565 crore in bonds between 2017 and 2023, according to its filings with the EC. With Rs. 1,123 crore, the Congress distant second.

The annual reports of the parties for the fiscal year 2023–2024 have not yet been released by the EC. However, a total of Rs. 16,518 crore in money was raised through the sale of electoral bonds between March 2018 and January 2024.

State-level regional parties in power are also major beneficiaries of electoral bond financing. The Trinamool Congress, which has ruled West Bengal since 2011, reported receiving donations of Rs. 1,093 crore throughout its tenure, placing it third in line behind the BJP and Congress.

The AAP announced that it has received contributions of Rs. 94 crore under the heading of “electoral bond/electoral trust” over the years. How much of that total comes from bonds alone is unclear. With an electoral bond donation of Rs. 64 crore, the NCP received one of the largest contributions of any non-ruling party.

Electrol bonds stuck down by Supreme court

TV Anchor: Satish, why were electoral bonds invalidated by the SC?

Satish: Voters have a right to transparency about political parties and their financing sources, the Supreme Court ruled in a majority decision. It emphasized the “deep association” that exists between money and politics and how economic disparity fuels political inequality by raising the likelihood of agreements between those with greater means to support political parties and those without.

The court ruled that the voters had a right to know about these arrangements since they might lead to favourable policy changes and government licenses. The Supreme Court ruled that donations intended to sway a party’s policies are not covered by the right to privacy of political affiliation; rather, contributions made as sincere expressions of support for the public cause are protected.

TV Anchor: Thank you, both, for your insights. As we wrap up, it’s clear that the Supreme Court’s decision to turn down the State Bank of India’s plea regarding Electoral Bonds has ignited a fresh debate on political funding transparency. The implications of this decision remain to be seen, but it certainly opens the door for potential reforms in the electoral financing system.

That concludes our coverage of the latest developments surrounding the electoral bond scheme. Stay tuned for more updates on this and other important stories. Thank you for joining us tonight on City News.

UPDATE: SBI has given the information on bond purchasers to the Election Commission. The information will be published on its website on March 15 by 5 pm

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1. The Electoral Bonds donor list by SBI will be released on which day ordered by the Supreme Court?

The bank has to submit the details to the ECI within March 12—the details of the electoral bonds bought by the donors since 2019 should be published on the ECI website by March 15, 5 pm

2. Electoral bonds were announced in which financial year?

Electoral bonds are announced during the Union budget for the years 2017–2018.

3. Who is the current Chief Justice of India?

D.Y. Chandrachud is the 50th and current Chief Justice of India.

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