Seeking to arrest flow of unaccounted cash into the coffers of political parties, the just introduced 'Electoral Bonds' will be bearer bonds and have a tenure of few days, Finance Minister Arun Jaitley said today.
The Bonds, which will resemble a promissory note and not an interest-paying debt instrument, will be sold by authorised banks and can be deposited in notified accounts of political parties within the duration of their validity.
Speaking at a post-Budget session with industry chambers, he said the bearer bonds can be purchased by corporate donors and donated to political parties without revealing their identity.
"Every political party has to notify one bank account (where the bonds can be deposited). Within a very short period of time, which will be notified in the scheme, it will be days not months these will be redeemable only in that account of the political party," he said.
Jaitley, who had capped anonymous cash donations to political parties at Rs 2,000, said bonds can be purchased using cheque or e-payments only. "So in the hands of the recipient it is clean money, in the hands of donor it will be tax paid money."
He said some of the political donations has stopped coming by cash, but that is only a small percentage.
"The bulk of it still never came by a cheque. And therefore our consultations with a very large body of people reveal that for good reasons the donors wanted to donate tax paid clean money for political system. Political parties are part of democracy," he said.
So a system was devised where the there will confidentiality of the donor will be maintained but the money becomes "absolutely clean."
"You can contribute, donate money to a political party by cheque, you will be entitled to a deduction. We would like to incentivise people to give small donations in very large volumes through the digital mode. That's what happening in other parts of the world, that is what needs to be encouraged," he said. .