The anonymity provided to the donors by electoral bonds (EBs) is making it the preferred choice for big donors, including corporates. Over the past three years, the State Bank of India (SBI), the official channel for selling these instruments, has sold EBs worth Rs6,492.68 crore in 14 phases, shows an analysis by Commodore Lokesh Batra (retd).
Cmde Batra says, "During 2018 to 2020, SBI sold 12,773 electoral bonds, of which 12,632 bonds worth Rs6,472.43 crore were encashed. Bonds worth Rs20.25 crore that remain uncashed were transferred to the Prime Minister's National Relief Fund (PMNRF)."
The analysis carried out by Cmde Batra is based on replies he had received under the Right to Information (RTI) Act from several public authorities, including SBI.
It shows Mumbai with 31.16% share remains at the top where electoral bonds were sold. Mumbai is followed by Kolkata at 22.98% and New Delhi at 14.67% share.
However, when it comes to encashing the electoral bonds, Delhi leads the pack. Over the past three years, 77.31% of electoral bonds sold, were encashed in the national capital, followed by Hyderabad at 9.31% and Bhubaneshwar at 4.84%. Despite contributing most in the electoral bond sale, when it comes to encashing, Mumbai is at the fifth spot with 2.34% share in total bonds encashed by the donee.
SBI in the XIV phase of the sale was authorised to issue and encash electoral bonds through its 29 authorised branches from 19th October to 28 October 2020. Redemption or encashment of electoral bonds at SBI branches took place till 11 November 2020.
Information obtained by Cmde Batra shows that during the 14 phases of sale of electoral bonds, SBI has earned Rs3.66 crore as commission, excluding taxes. During the 14th phase, SBI sold 321 electoral bonds worth Rs282.29 crore, of which all except one bond of Rs1,000, the rest were encashed.
Until the latest window period till October 2020, a total of 12,773 electoral bonds of various denominations were sold. A major portion of them is the highest value denomination of Rs1 crore (5,981 bonds) followed by the next highest denomination of Rs10 lakh (4,943 bonds). A total of 1,731 bonds of Rs1 lakh denomination were sold in these 14 cycles. Meanwhile, the purchases made for the lower denominations of Rs1,000 and Rs10,000 are only 48 and 70 electoral bonds, respectively.
The analysis by Cmde Batra shows electoral bonds with the highest denomination value of Rs1 crore are most preferred by the donors and constitute 92.12% in the total value. It is followed by bonds worth Rs10 lakh, which form 7.61% and Rs1 lakh with just 0.27% share in the total value of electoral bonds sold till date.
On 2 January 2018, the ministry of finance had notified the EB scheme. As per the scheme, an electoral bond is a bond issued in the nature of a promissory note, it may be purchased by a person who is a citizen of India or entities incorporated or established in India. The bonds are issued in multiples of Rs1,000, Rs10,000, Rs1 lakh, Rs10 lakh and Rs1 crore.
These are available at specified branches of SBI and any account-holder compliant with know-your-customer (KYC) norms can buy these bonds. Donors can donate the bonds to their party of choice, which can then be encashed by the party's verified account within 15 days. The bond does not carry the name of the buyer or the payee.
The political party does not have to disclose who it has received the bond from in its account. Neither does the donor entity have to state to which party it has donated. Also, as per the scheme only eligible political parties with 1% vote share are eligible to buy electoral bonds.
The Association for Democratic Reforms (ADR), a non-government organisation (NGO), has been raising the issue of political funding through electoral bonds by anonymous donors. An analysis by ADR shows that Lok Sabha 2019 elections saw the highest ever anonymous funding through electoral bonds. Between FY17-18 and FY18-19, political parties received a total of Rs2,760.20 crore from electoral bonds as donation, ADR says.
In its plea filed in October this year before the Supreme Court, ADR had called sale of electoral bonds just before election as corruption on a huge scale.
"Certain amendments made through the Finance Act, 2017 and earlier Finance Act, 2016, both passed as money bills, and which have opened the doors to unlimited political donations, even from foreign companies, thereby legitimizing electoral corruption at a huge scale, while at the same time ensuring complete non-transparency in political funding," the plea filed by ADR says.
The plea contended that the Finance Act of 2017 had introduced the use of electoral bonds which is exempt from disclosure under the Representation of Peoples Act, 1951, opening the doors to unchecked, unknown funding to political parties.
"The said amendments have removed the existing cap of 7.5% of net profit in the past three years on campaign donations by companies and have legalised anonymous donations," added the plea.