DNA Explainer: What are Electoral Bonds that was termed 'unconstitutional' by Supreme Court?

The Supreme Court on Thursday struck down the electoral bond scheme, saying it violates the right to information and the freedom of speech and expression under the Constitution.

In a landmark judgment that will have wide ramifications, it ordered the State Bank of India to disclose to the Election Commission the names of the contributors to the six-year-old scheme.

A five-judge Constitution bench headed by Chief Justice D Y Chandrachud delivered two separate and unanimous verdicts on the pleas challenging the scheme, delivering a major blow to the central government.

Pronouncing the verdict, the CJI said the scheme is violative of freedom of speech and expression under Article 19(1)(a) of Constitution.

The bench said the fundamental right to privacy also includes citizens’ right to political privacy and affiliation.

It also held as invalid the amendments made in various laws, including the Representation of Peoples Act and the Income Tax laws.

It directed that the issuing bank shall stop issuance of electoral bonds and the State Bank of India shall submit details of electoral bonds purchased since April 12, 2019 till date to the Election Commission.

The top court had on November 2 last year reserved its verdict in the matter.

The scheme, which was notified by the government on January 2, 2018, was pitched as an alternative to cash donations made to political parties as part of efforts to bring transparency in political funding.

What are electoral bonds?

1. An Electoral Bond would be a bearer instrument like a Promissory Note and an interest-free banking instrument. A citizen of India or a body incorporated in India will be eligible to purchase the bond.

2. Electoral bond would be issued/purchased for any value, in multiples of Rs 1,000, Rs 10,000, Rs 1,00,000, Rs 10,00,000 and Rs 1,00,00,000 from the specified branches of the State Bank of India (SBI).

3. The purchaser would be allowed to buy an electoral bond(s) only on due fulfilment of all the extant KYC norms and by making payment from a bank account. It will not carry the name of the payee. Electoral Bonds would have a life of only 15 days during which they can be used for making donations only to the political parties registered under section 29A of the Representation of the Peoples Act, 1951 (43 of 1951) and which secured not less than 1%  of the votes polled in the last general election to the House of the People or a Legislative Assembly.

4. The bonds under the Scheme shall be available for purchase for 10 days each in January, April, July and October, as may be specified by the Central Government. An additional period of 30 days shall be specified by the Central Government in the year of the General election to the House of People.

5. The bond shall be encashed by an eligible political party only through a designated bank account with the authorised bank.