With the aim of keeping a check on the funding of political parties and controlling the generation of black money, the Government of India launched the scheme of Electoral Bond during the Budget of the financial year 2017-18.
Very much like a Currency Note, an Electoral Bond is a bond which has a specific face value that is payable to the bearer on demand and free of interest. These bonds can be purchased by any citizen of India or institutions and organizations incorporated in India to fund the registered political parties of India. These Electoral Bonds will be issued in the denomination of ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh, and ₹1 crore and will be available at specific branches of State Bank of India.
The Election Commission of India will allow a verified account to every party that has been registered under section 29A of the Representation of the Peoples Act, 1951 and has secured at least one percent votes polled in the most recent Lok Sabha or State election, and Electoral Bond transaction can be made only via this account.
Though the name of the bond purchases will be kept confidential by the banks, each donor has to provide his KYC details to the bank. These bonds can be bought in the first ten days of every quarter of the year which means that the bonds can be purchased in the months of January, April, July, and October of every year. However, 30 extra days will be provided in the year of Lok Sabha elections. These Electoral Bonds will be valid for the duration of 15 days from the date of purchase.
After the budget of 2017, the Government of India had reduced the limit of an anonymous donation to ₹2000/- only and the political parties have to inform the Election Commission of India regarding the funds they have received via Electoral Bond.