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Electoral Bonds and Electoral Trusts: What are they, and how do they differ?

EBs and ETs are nothing but means to aid in investments by companies or people of India towards political parties. 

What are ELECTORAL BONDS?

  1. EB scheme was implemented in 2018.
  2. Anyone in the country could donate funds to political parties anonymously.
  3. EBs can be bought from authorized SBI branches
  4. Bonds are sold in denominations ranging from 1,000 rupees to 1 CR rupees
  5. It can only be purchased by making payments through bank accounts that are KYC compliant
  6. A political party has 15 days to encash the funds
  7. The Electoral bonds are available for purchase only between a 10day window in January, April, July and October.
  8. Donations by electoral bonds can be paid only to those political parties that are registered under Section 29a of the Representation of the People’s Act, 1951 and those who have got more than 1% vote in the last Lok Sabha and State elections.

What are ELECTORAL TRUSTS?

ETs are set up by companies with the objective to distribute the contributions received from other companies and individuals to the political parties.

  • The companies which are registered under Section 25 of the Companies Act, 1956 are only eligible

Who can contribute to electoral trusts?

  • Any citizen of India
  • A company registered in India
  • An association of persons (Indian residents)

Difference between the two

ELECTORAL TRUSTS 

  1. Contributions can be made in cash, cheque or bank transactions.
  2. Contributor details are available.

ELECTORAL BONDS

  1. Contributions can’t be made in cash.
  2. Contributor stays anonymous 

Why were electoral bonds introduced ? To promote transparency in political funding as ETs include cash contributions.

But, the anonymity of contributors and gainer raises suspicions regarding the proper channelization of money.

REF: https://indianexpress.com/article/explained/explained-politics/electoral-bonds-electoral-trusts-9018591/, https://www.deccanherald.com/india/explained-what-are-electoral-trusts-and-how-do-they-work-1176801.html

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