Understanding Electoral Bonds: Their Role and Impact

An in-depth look into the world of electoral bonds, this article explores their role, impact and the surrounding controversy. Dive in to understand this complex financial instrument in political funding.

Introduction to Electoral Bonds

Electoral bonds offer a method for political parties in some democratic systems to raise funds, ensuring their smooth functioning and financing for political campaigns. Introduced with an intention to bring transparency and check the flow of ‘black money’ in political funding, electoral bonds bring new dynamics to the financial aspect of politics.

The Basics of Electoral Bonds

Electoral bonds are interest-free banking instruments, similar to Promissory Notes, which allow donors to donate funds anonymously to political parties. They are issued by a notified bank, available for purchase by any person, including corporations. The identity of the donor remains known only to the bank, maintaining the confidentiality of the donors. This confidentiality clause is to protect the donors from potential harassment or victimization from rival political parties.

The Mechanics of Electoral Bonds

Once purchased, the electoral bonds can only be donated to a political party. The party must have secured at least 1% of the votes in the most recent elections. The bonds are time-sensitive, having a shelf life of just 15 days. During these 15 days, the bond must be cashed by the political party by depositing it into their registered bank account. After the 15 day period, the bond will lose its value.

Controversy Surrounding Electoral Bonds

Despite their objective to increase transparency, electoral bonds have faced criticism. Detractors argue the anonymity of the donors allows corporations and individuals to influence politics without public knowledge. They fear the unknown sources of political party funds could lead to corruption or policy manipulation in favour of high-paying donors.

Impact on Political Funding

Since its introduction, electoral bond funding has had a significant impact on the political landscape. For example, in India, nearly 60% of the political funding came from electoral bonds in 2018, according to the Association for Democratic Reforms. The ability to make anonymous political contributions thru electoral bonds has presumably incentivized more corporations and individuals to fund political parties.


As a relatively novel idea, electoral bonds stand as a potentially game-changing financial instrument in the political arena. While adding a veil of transparency to anonymous donations, they also invite a plethora of questions on potential corruption and influence-peddling. As with any financial instrument, the overall impact and the value of electoral bonds largely depend on the regulations put in place to monitor them.

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