Terming its decision to introduce electoral bonds as "a big step towards electoral reform", the Centre told the Supreme Court on Thursday that the process envisaged in acquiring and encasing the bonds "will ensure transparency" and "accountability".
The Union Finance Ministry said this in an affidavit filed in response to petitions filed by the CPM and others, who alleged that the bonds, by way of which contributions can be made to political parties, sought to create an anonymous and secretive mechanism for increasing the wealth of parties and brought in unreasonable restrictions on the freedom to know the identity of the contributor.
The move, the Centre said, was part of a "conscious legislative policy" to further electoral reforms "to defeat the growing menace of black money, especially when the country is moving towards a cashless-digital economy".
The affidavit referred to various features of the bonds and said that "the scheme envisages building a transparent system of acquiring bonds with validated KYC and an audit trail".
"Besides, a limited window and a very short maturity period shall make any misuse improbable," the affidavit said, adding that "donors who buy these bonds, their balancesheet will reflect such donations made".
The government said that "the electoral bonds will prompt donors to take the banking route to donate, with their identity captured by the issuing authority".
The bond, "which will be a bearer instrument, will not carry the name of the payee and can be bought for any value, in multiples of Rs 1,000, Rs 10,000, Rs 1 lakh, Rs 10 lakh or Rs 1 crore. These bonds with a life of only 15 days, during which they can be used for making donation only to registered political parties, can be encashed only through a designated bank account of the receiver. It will be available for purchase for 10 days each in designated months only", the affidavit said.
It said that "the purchaser, whose name will not appear on the bonds, would have to make KYC (know your customer) disclosures to the SBI".
The bond can be encashed by a political party only through a bank account with the authorised bank, and the only authorised bank envisaged by the law relating to the bonds is the State Bank of India, it said. "Further, every political party will file returns before the Election Commission of India," it said.
The affidavit also said that "in order to balance the interest of the inpidual vis- -vis the State", it was "notified that the information furnished by the buyer shall be treated confidential by the authorised bank and shall not be disclosed to any authority for any purposes, except when demanded by a competent court or upon registration of criminal case…".